FORUM FUNDS, 497, 1999-01-08

FORUM FUNDS
497, 1999-01-08

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PROSPECTUS
------------------------------
INVESTOR
SHARES
------------------------------

[Picure graphics on left half
of cover of safe dial, calendar, Daily Assets
globe in background and a scenic Treasury
picture of lake, mountains,trees Obligations Fund
and clouds.]
Daily Assets
Government Fund

Daily Assets
Government
Obligations Fund

Daily Assets
Cash Fund

Daily Assets
Municipal fund

FORUM
FUNDS

JANUARY 1, 1999

<PAGE>

FORUM FUNDS
Daily Assets Treasury Obligations Fund
Daily Assets Government Fund
Daily Assets Government Obligations Fund
Daily Assets Cash Fund
Daily Assets Municipal Fund

PROSPECTUS
January 1, 1999
- --------------------------------------------------------------------------------
THIS PROSPECTUS OFFERS INVESTOR SHARES OF DAILY ASSETS TREASURY OBLIGATIONS
FUND, DAILY ASSETS GOVERNMENT FUND, DAILY ASSETS GOVERNMENT OBLIGATIONS FUND,
DAILY ASSETS CASH FUND AND DAILY ASSETS MUNICIPAL FUND (EACH A "FUND"). EACH
FUND IS A DIVERSIFIED NO-LOAD, MONEY MARKET PORTFOLIO OF FORUM FUNDS (THE
"TRUST"), A REGISTERED, OPEN-END, MANAGEMENT INVESTMENT COMPANY. EACH FUND SEEKS
TO PROVIDE ITS SHAREHOLDERS WITH HIGH CURRENT INCOME (WHICH, IN THE CASE OF
DAILY ASSETS MUNICIPAL FUND, IS EXEMPT FROM FEDERAL INCOME TAXES) TO THE EXTENT
CONSISTENT WITH THE PRESERVATION OF CAPITAL AND THE MAINTENANCE OF LIQUIDITY.

EACH FUND SEEKS TO ACHIEVE ITS OBJECTIVE BY INVESTING ALL OF ITS INVESTABLE
ASSETS IN A SEPARATE PORTFOLIO OF AN OPEN-END, MANAGEMENT INVESTMENT COMPANY
WITH AN IDENTICAL INVESTMENT OBJECTIVE. SEE "OTHER INFORMATION - FUND
STRUCTURE." THROUGH THE PORTFOLIO IN WHICH IT INVESTS:

DAILY ASSETS TREASURY OBLIGATIONS FUND invests substantially all of
its assets in obligations of the U.S. Treasury and in repurchase
agreements backed by these obligations.
DAILY ASSETS GOVERNMENT FUND invests substantially all of its assets
in obligations of the U.S. Government, its agencies and
instrumentalities with a view toward providing income that is
generally considered exempt from state and local income taxes.
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND invests substantially all of
its assets in obligations of the U.S. Government, its agencies and
instrumentalities and in repurchase agreements backed by these
obligations.
DAILY ASSETS CASH FUND invests in a broad spectrum of high-quality
money market instruments.
DAILY ASSETS MUNICIPAL FUND invests primarily in high-quality
obligations of the states, territories and possessions of the U.S. and
of their subdivisions, authorities and corporations ("municipal
securities") with a view toward providing income that is exempt from
federal income taxes.

This Prospectus sets forth concisely the information concerning the Trust and
the Funds that a prospective investor should know before investing. The Trust
has filed with the Securities and Exchange Commission ("SEC") a Statement of
Additional Information dated January 1, 1999 (the "SAI"), which contains more
detailed information about the Trust and the Funds and is available together
with other related materials for reference on the SEC's Internet Web Site
(http://www.sec.gov). The SAI, which is incorporated into this Prospectus by
reference, also is available without charge by contacting the Funds' transfer
agent, Forum Shareholder Services, LLC, at P.O. Box 446, Portland, Maine 04112,
(207) 879-0001 or (800) 94FORUM.

INVESTORS SHOULD READ THIS PROSPECTUS AND RETAIN IT FOR FUTURE REFERENCE.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
TABLE OF CONTENTS
1. Prospectus Summary.............................. 2 5. Purchases and Redemptions of Shares............. 13
2. Financial Highlights............................ 4 6. Distributions and Tax Matters................... 17
3. Investment Objectives and Policies.............. 5 7. Other Information............................... 19
4. Management...................................... 10
</TABLE>

ALTHOUGH THE FUNDS SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER
SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUNDS. AN INVESTMENT IN
THE FUNDS IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY, AND IS NOT ENDORSED OR GUARANTEED BY
ANY BANK OR ANY AFFILIATE OF A BANK.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

<PAGE>

1. PROSPECTUS SUMMARY

HIGHLIGHTS OF THE FUNDS

This Prospectus offers shares of the Investor class ("Investor Shares") of each
of the Funds. The Funds operate in accordance with the provisions of Rule 2a-7
under the Investment Company Act of 1940 (the "1940 Act"). Each Fund invests all
of its investable assets in a separate portfolio (each a "Portfolio") of Core
Trust (Delaware), an open-end, management investment company ("Core Trust") as
follows:

Daily Assets Treasury Obligations Fund Treasury Cash Portfolio
Daily Assets Government Fund Government Portfolio
Daily Assets Government Obligations Fund Government Cash Portfolio
Daily Assets Cash Fund Cash Portfolio
Daily Assets Municipal Fund Municipal Cash Portfolio

Accordingly, the investment experience of each Fund will correspond directly
with the investment experience of its corresponding Portfolio. See "Other
Information - Fund Structure." Each Fund currently offers three separate classes
of shares: Institutional Shares, Institutional Service Shares and Investor
Shares. Investor Shares are sold through this Prospectus. Institutional Shares
and Institutional Service Shares are each offered by a separate prospectus.
See "Other Information -- Fund Structure -- Other Classes of Shares."

MANAGEMENT. Forum Administrative Services, LLC ("FAdS") supervises the overall
management of the Funds and the Portfolios and Forum Fund Services, LLC ("FFS")
is the distributor of the Funds' shares (Forum Financial Services, Inc. ("FFSI")
until February 28, 1999). Forum Investment Advisors, LLC ("FIA") is the
investment adviser of each Portfolio and provides professional management of the
Portfolios' investments. The Funds' transfer agent, dividend disbursing agent
and shareholder servicing agent is Forum Shareholder Services, LLC ("FSS"). See
"Management" for a description of the services provided and fees charged to the
Funds.

SHAREHOLDER SERVICING AND DISTRIBUTION. The Trust has adopted a Shareholder
Service Plan and a Plan of Distribution relating to Investor Shares under which
FAdS and FFS, respectively, are compensated for various shareholder servicing
and distribution related activities. See "Management - Shareholder Servicing"
and "- Administration and Distribution."

PURCHASES AND REDEMPTIONS. The minimum initial investment in Investor Shares is
$10,000 ($2,000 for IRAs, $2,500 for exchanges). The minimum subsequent
investment is $500. Investor Shares may be purchased and redeemed Monday through
Friday, between 8:00 a.m. and 6:00 p.m., Eastern time, except on the following
holidays (or the days on which they are observed): New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Columbus Day, Veterans' Day, Thanksgiving and Christmas ("Fund
Business Days"). To be eligible to receive that day's income, purchase orders
must be received by FSS in good order no later than 2:00 p.m., Eastern time
(noon in the case of Daily Assets Government Fund and Daily Assets Municipal
Fund). Shareholders may have redemption proceeds over $5,000 transferred by bank
wire to a designated bank account. To be able to receive redemption proceeds by
wire on the day of the redemption, redemption orders must be received by FSS in
good order no later than 2:00 p.m., Eastern time (noon in the case of Daily
Assets Government Fund and Daily Assets Municipal Fund). All times may be
changed without notice by Fund management due to market activities. See
"Purchases and Redemptions of Shares."

Shares of one or more of the Funds may not be currently offered for sale in your
state.

EXCHANGES. Shareholders of a Fund may exchange Investor Shares without charge
for Investor Shares of the other Funds and for the shares of other certain
mutual funds not offered by this Prospectus. See "Purchases and Redemptions of
Shares - Exchanges."

DISTRIBUTIONS. Distributions of net investment income are declared daily and
paid monthly by each Fund and are automatically reinvested in additional Fund
shares unless the shareholder has requested payment in cash. See "Distributions
and Tax Matters."

2
<PAGE>

INVESTMENT CONSIDERATIONS. There can be no assurance that any Fund will be able
to maintain a stable net asset value of $1.00 per share. Although the Portfolios
invest only in money market instruments, all securities, including U.S.
Government Securities, involve some level of investment risk. An investment in a
Fund is not insured by the FDIC, nor is it insured or guaranteed against loss of
principal.

EXPENSES OF INVESTING IN THE FUNDS

The purpose of the following table is to assist investors in understanding the
various expenses that an investor in Investor Shares will bear directly or
indirectly. There are no transaction expenses associated with purchases,
redemptions or exchanges of Fund shares.

ANNUAL FUND OPERATING EXPENSES(1)
(as a percentage of average net assets)
<TABLE>
<S> <C> <C> <C> <C>
Daily Assets Daily Assets Daily Assets Daily Assets Daily Assets
Treasury Government Government Cash Municipal
Obligations Fund Fund Obligations Fund Fund Fund
---------------- ---- ---------------- ---- ----
Management Fees (after waivers)(2) 0.14% 0.15% 0.14% 0.14% 0.15%
Rule 12b-1 Fees(after waivers)(3) 0.30% 0.15% 0.30% 0.30% 0.30%
Other Expenses(4)
(after expense reimbursements) 0.46% 0.45% 0.46% 0.46% 0.45%
----- ----- ----- ----- -----
Total Operating Expenses 0.90% 0.75% 0.90% 0.90% 0.90%
</TABLE>

(1) For a further description of the various expenses incurred in the
operation of the Funds and Portfolios, see "Management." The amount of fees and
expenses for each Fund is based on estimated annualized expenses for the Funds'
fiscal year ending August 31, 1999. Each Fund's expenses include the Fund's pro
rata portion of all expenses of its corresponding Portfolio, which are borne
indirectly by Fund shareholders.
(2) Management Fees include all administration fees and investment advisory
fees incurred by the Funds and the Portfolios.
(3) Absent waivers, Rule 12b-1 fees would be 0.50% for each Fund except
Daily Assets Government Fund. Shareholders may pay Rule 12b-1 fees totaling in
the aggregate more than the economic equivalent of the maximum front-end sales
charge permitted by the rules of the National Association of Securities Dealers,
Inc.
(4) Absent estimated reimbursements by FIA and its affiliates, Other
Expenses and Total Operating Expenses would be: 0.70% and 1.34%, respectively,
for Daily Assets Treasury Obligations Portfolio; 0.75% and 1.05%, respectively,
for Daily Assets Government Fund; 0.75% and 1.39%, respectively, for Daily
Assets Government Obligations Fund; 0.80% and 1.44%, respectively, for Daily
Assets Cash Fund; and 0.80% and 1.45%, respectively, for Daily Assets Municipal
Fund. Expense reimbursements are voluntary and may be reduced or eliminated at
any time.

EXAMPLE

Following is a hypothetical example that indicates the dollar amount of expenses
that an investor in Investor Shares would pay assuming: (1) the investment of
all of the Fund's assets in the Portfolio; (2) a $1,000 investment in the Fund;
(3) a 5% annual return; (4) the reinvestment of all distributions; and (5)
redemption at the end of each period:
<TABLE>
<S> <C> <C> <C> <C>
One Three Five Ten
Year Years Years Years
---- ----- ----- -----
Daily Assets Government Fund $8 $24 $42 $93
Each Other Fund $9 $29 $50 $111
</TABLE>

The example is based on the expenses listed in the Annual Fund Operating
Expenses table, which assumes the continued waiver and reimbursement of certain
fees and expenses. The five percent annual return is not predictive of and does
not represent the Funds' projected returns; rather, it is required by government
regulation. THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR RETURN. ACTUAL EXPENSES AND RETURN MAY BE GREATER OR LESS
THAN INDICATED.

3
<PAGE>

2. FINANCIAL HIGHLIGHTS

The following information represents selected data for a single outstanding
Investor Share of the Funds offering Investor Shares for the period indicated.
As of August 31, 1998, Investor Shares of Daily Assets Government Fund had not
commenced operations. Prior to the offering of Investor Shares, Daily Assets
Government Fund and Daily Assets Cash Fund had commenced operations; selected
data for a single outstanding Institutional Service Share of the Funds since
their inception is also shown. Information for each of the years or periods
ended August 31 wase audited by KPMG LLP, independent auditors, whose report
dated October 6, 1998 expressed an unqualified opinion on this information.
Information for Daily Assets Government Fund for each of the years or periods
prior to March 31, 1997 was audited by other independent auditors. The Funds'
financial statements and independent auditors' report are included in the Funds'
annual report which is incorporated by reference into the SAI and may be
obtained without charge.

As of August 31, 1998, Treasury Cash Portfolio, Government Portfolio, Government
Cash Portfolio, Cash Portfolio and Municipal Cash Portfolio had net assets of
$264,844,947, $46,762,986, $717,124,347, $607,340,844, and $20,834,474
respectively.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Ratio to Average
Net Assets
-----------------

Beginning Distributions Ending Net
Net Asset Net From Net Asset Net
Value Per Investment Investment Value Per Net Investment
Share Income Income Share Expenses Income
----- ------ ------ ----- -------- ------
DAILY ASSETS TREASURY OBLIGATIONS FUND
INVESTOR SHARES
Period Ended August 31, 1998(2) $1.00 0.02 (0.02) $1.00 0.78%(3) 5.06%(3)

DAILY ASSETS GOVERNMENT FUND
INSTITUTIONAL SERVICE SHARES
Year Ended August 31, 1998 $1.00 0.05 (0.05) $1.00 0.46% 4.93%
April 1, 1997 to August 31, 1997 1.00 0.02 (0.02) 1.00 0.50%(3) 4.76%(3)
Year Ended March 31, 1997 1.00 0.05 (0.05) 1.00 0.50% 4.70%
Year Ended March 31, 1996 1.00 0.05 (0.05) 1.00 0.50% 5.01%
Year Ended March 31, 1995 1.00 0.04 (0.04) 1.00 0.37% 4.45%
Year Ended March 31, 1994 1.00 0.03 (0.03) 1.00 0.33% 2.82%
July 1, 1992 to March 31, 1993 1.00 0.02 (0.02) 1.00 0.22%(3) 2.92%(3)

DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
INVESTOR SHARES
Period Ended August 31, 1998(2) $1.00 0.02 (0.02) $1.00 0.78%(3) 5.06%(3)

DAILY ASSETS CASH FUND
INVESTOR SHARES
Period Ended August 31, 1998(2) $1.00 0.02 (0.02) $1.00 0.78%(3) 5.25%(3)

INSTITUTIONAL SERVICE SHARES
Year Ended August 31, 1998 $1.00 0.05 (0.05) $1.00 0.46% 5.22%
October 1, 1996 to August 31, 1997 1.00 0.05 (0.05) 1.00 0.52%(3) 5.06%(3)%

DAILY ASSETS MUNICIPAL FUND
INVESTOR SHARES
Period Ended August 31, 1998 (2) $1.00 0.01 (0.01) $1.00 0.78%(3) 2.53%(3)
</TABLE>

<TABLE>

Net Assets Ratio of
End of Gross
Period Expenses
Total (000s to Average
Return Omitted) Net Assets (1)
------ -------- --------------

0.89% $ 10 727.11%(3)

5.04% $ 9,485 0.91%
2.01% 44,116 0.95%(3)
4.80% 43,975 0.99%
5.18% 43,103 1.06%
4.45% 36,329 1.10%
2.83% 26,505 1.17%
3.13%(3) 4,687 2.43%(3)

0.90% $ 10 766.21%(3)

5.91% $ 10 709.02%(3)

5.34% $ 5,235 0.90%
4.70% 12,076 1.22%(3)

0.06% $ 10 749.30%(3)
</TABLE>

(1) The ratio of Gross Expenses to Average Net Assets reflects the expense
ratio excluding any waivers and expense reimbursements for the Fund and its
respective Portfolio.

(2) The Trust commenced the offering of the Investor Share class of Daily
Assets Treasury Obligations Fund, Daily Assets Government Obligations Fund,
Daily Assets Cash Fund, and Daily Assets Municipal Fund on August 6, 1998.

(3) Annualized.

4
<PAGE>

3. INVESTMENT OBJECTIVES AND POLICIES

Each Fund has an investment policy that allows it to invest all of its
investable assets in its corresponding Portfolio. All other investment policies
of each Fund and its corresponding Portfolio are identical. Therefore, although
the following discusses the investment policies of the Portfolios (and the
responsibilities of the Core Trust's Board of Trustees (the "Core Trust
Board")), it applies equally to the Funds (and the Trust's Board of Trustees
(the "Board")).

INVESTMENT OBJECTIVE

The investment objective of each Fund except Daily Assets Municipal Fund is to
provide high current income to the extent consistent with the preservation of
capital and the maintenance of liquidity. The investment objective of Daily
Assets Municipal Fund is to provide high current income which is exempt from
federal income taxes to the extent consistent with the preservation of capital
and the maintenance of liquidity. Each Fund currently seeks to achieve its
investment objective by investing all of its investable assets in its
corresponding Portfolio, which has the same investment objective.

THERE CAN BE NO ASSURANCE THAT ANY FUND OR PORTFOLIO WILL ACHIEVE ITS INVESTMENT
OBJECTIVE OR MAINTAIN A STABLE NET ASSET VALUE.

INVESTMENT POLICIES

Each Portfolio invests only in high quality, U.S. dollar-denominated short-term
money market instruments that are determined by FIA, pursuant to procedures
adopted by the Core Trust Board, to be eligible for purchase and to present
minimal credit risks. High quality instruments include those that: (1) are rated
(or, if unrated, are issued by an issuer with comparable outstanding short-term
debt that is rated) in the highest rating category by two nationally recognized
statistical rating organizations ("NRSROs") or, if only one NRSRO has issued a
rating, by that NRSRO; or (2) are otherwise unrated and determined by FIA to be
of comparable quality. A description of the rating categories of certain NRSROs,
such as Standard & Poor's, A Division of The McGraw Hill Companies, and Moody's
Investors Service, Inc., is contained in the SAI.

Each Portfolio invests only in instruments that have a remaining maturity of 397
days or less (as calculated under Rule 2a-7 of the 1940 Act) and maintains a
dollar-weighted average portfolio maturity of 90 days or less. Except to the
limited extent permitted by Rule 2a-7 and except for U.S. Government Securities,
each Portfolio will not invest more than 5% of its total assets in the
securities of any one issuer. As used herein, "U.S. Government Securities" means
obligations issued or guaranteed as to principal and interest by the United
States government, its agencies or instrumentalities and "Treasury Securities"
means U.S. Treasury bills and notes and other U.S. Government Securities which
are guaranteed as to principal and interest by the U.S. Treasury.

In the case of municipal securities, when the assets and revenues of an issuer
are separate from those of the government creating the issuer and a security is
backed only by the assets and revenues of the issuer, the issuer and not the
creating government is deemed to be the sole issuer of the security. Similarly,
in the case of a security issued by or on behalf of public authorities to
finance various privately operated facilities that is backed only by the assets
and revenues of the non-governmental user, the non-governmental user will be
deemed to be the sole issuer of the security.

Although each Portfolio only invests in high quality money market instruments,
an investment in a Portfolio is subject to risk even if all securities in the
Portfolio's portfolio are paid in full at maturity. All money market
instruments, including U.S. Government Securities and municipal securities, can
change in value when there is a change in interest rates, the issuer's actual or
perceived

5
<PAGE>

creditworthiness or the issuer's ability to meet its obligations.

DAILY ASSETS TREASURY OBLIGATIONS FUND

Treasury Cash Portfolio seeks to attain its investment objective by investing
substantially all of its assets in Treasury Securities and in repurchase
agreements backed by Treasury Securities.

DAILY ASSETS GOVERNMENT FUND

Government Portfolio seeks to attain its investment objective by investing
substantially all of its assets in U.S. Government Securities. The Portfolio
invests with a view toward providing income that is generally considered exempt
from state and local income taxes.

Among the U.S. Government Securities in which the Portfolio may invest are U.S.
Treasury Securities and obligations of the Farm Credit System, Farm Credit
System Financial Assistance Corporation, Federal Financing Bank, Federal Home
Loan Banks, General Services Administration, Student Loan Marketing Association,
and Tennessee Valley Authority. Income on these obligations and the obligations
of certain other agencies and instrumentalities is generally not subject to
state and local income taxes by Federal law. In addition, the income received by
Fund shareholders that is attributable to these investments will also be exempt
in most states from state and local income taxes. Shareholders should determine
through consultation with their own tax advisers whether and to what extent
dividends payable by the Fund from interest received with respect to its
investments will be considered to be exempt from state and local income taxes in
the shareholder's state. Shareholders similarly should determine whether the
capital gain and other income, if any, payable by the Fund will be subject to
state and local income taxes in the shareholder's state. See "Distributions and
Tax Matters."

The U.S. Government Securities in which the Portfolio may invest include
securities supported primarily or solely by the creditworthiness of the issuer.
There is no guarantee that the U.S. government will support securities not
backed by its full faith and credit. Accordingly, although these securities have
historically involved little risk of loss of principal if held to maturity, they
may involve more risk than securities backed by the U.S. government's full faith
and credit.

DAILY ASSETS GOVERNMENT OBLIGATIONS FUND

Government Cash Portfolio seeks to attain its investment objective by investing
substantially all of its assets in U.S. Government Securities and in repurchase
agreements backed by U.S. Government Securities. The U.S. Government Securities
in which the Portfolio may invest include Treasury Securities and securities
supported primarily or solely by the creditworthiness of the issuer, such as
securities of the Federal National Mortgage Association. There is no guarantee
that the U.S. Government will support securities not backed by its full faith
and credit. Accordingly, although these securities have historically involved
little risk of loss of principal if held to maturity, they may involve more risk
than securities backed by the U.S. Government's full faith and credit.

DAILY ASSETS CASH FUND

Cash Portfolio seeks to attain its investment objective by investing in a broad
spectrum of money market instruments. The Portfolio may invest in: (1)
obligations of domestic financial institutions; (2) U.S. Government Securities
(see "Investment Objectives and Policies - Daily Assets Government Portfolio");
and (3) corporate debt obligations of domestic issuers.

6
<PAGE>

one billion dollars. Certificates of deposit represent an institution's
obligation to repay funds deposited with it that earn a specified interest rate
over a given period. Bank notes are debt obligations of a bank. Bankers'
acceptances are negotiable obligations of a bank to pay a draft which has been
drawn by a customer and are usually backed by goods in international trade. Time
deposits are non-negotiable deposits with a banking institution that earn a
specified interest rate over a given period. Certificates of deposit and fixed
time deposits, which are payable at the stated maturity date and bear a fixed
rate of interest, generally may be withdrawn on demand by the Portfolio but may
be subject to early withdrawal penalties which could reduce the Portfolio's
yield.

Corporate debt obligations include commercial paper (short-term promissory
notes) issued by companies to finance their, or their affiliates', current
obligations. The Portfolio may also invest in commercial paper or other
corporate securities issued in "private placements" without registration under
the Securities Act of 1933 (the "1933 Act"). These "restricted securities" are
restricted as to disposition under the Federal securities laws in that the sale
of these securities may not be made absent registration under the 1933 Act or an
appropriate exemption therefrom.

DAILY ASSETS MUNICIPAL FUND

Municipal Cash Portfolio seeks to attain its investment objective by investing
substantially all of its assets in municipal securities. The Portfolio attempts
to maintain 100% of its assets invested in federally tax-exempt municipal
securities; during periods of normal market conditions, the Portfolio will have
at least 80% of its net assets invested in federally tax-exempt instruments the
income from which may be subject to the federal alternative minimum tax ("AMT").

The Portfolio may from time to time invest more than 25% of its assets in
obligations of issuers located in one state but, under normal circumstances,
will not invest more than 35% of its assets in obligations of issuers located in
one state or territory. If the Portfolio concentrates its investments in this
manner, it will be more susceptible to factors adversely affecting issuers of
those municipal securities than would be a more geographically diverse municipal
securities portfolio. These risks arise from the financial condition of the
particular state or territory and its political subdivisions.

THE SHORT-TERM MUNICIPAL SECURITIES MARKET. The Portfolio may invest a
substantial portion of its portfolio in municipal securities supported by credit
and liquidity enhancements (i.e. letters of credit not covered by federal
deposit insurance or put or demand features of third party financial
institutions, generally domestic and foreign banks). The Portfolio's policy is
to purchase municipal securities with third party credit or liquidity support
only after FIA has considered the creditworthiness of the financial institution
providing the support and believes that the security presents minimal credit
risk. Such investments will expose the Portfolio to risks pertaining to the
banking industry, including the foreign banking industry such as interest rate
and credit risk.

The Portfolio may purchase variable rate demand notes ("VRDN") which are
municipal bonds with maturities of up to 40 years that are sold with a demand
feature (an option for the holder of the security to sell the security back to
the issuer). They may be exercised by the security holder at predetermined
intervals, usually daily or weekly. The interest rate on the security is
typically reset by a remarketing or similar agent at prevailing interest rates.
Tender option bonds (also referred to as certificates of participation) are
municipal securities with relatively long original maturities and fixed rates of
interest that are coupled with an agreement by a third party financial
institution to grant the security holders an option to tender the securities to
the institution and receive the face value thereof. The option may be exercised
at periodic intervals, usually six months to a year. These bonds effectively
provide

7
<PAGE>

the holder with a demand obligation that bears interest at the prevailing
short-term municipal securities interest rate.

The Portfolio also may acquire "puts" on municipal securities it purchases. A
put gives the Portfolio the right to sell the municipal security at a specified
price at any time before a specified date. The Portfolio will acquire puts only
to enhance liquidity, shorten the maturity of the related municipal security or
permit the Portfolio to invest its funds at more favorable rates.

MUNICIPAL BONDS AND NOTES. Municipal bonds are long term fixed-income
securities. "General obligation" bonds are secured by the issuer's pledge of its
full faith, credit and taxing power for the payment of principal and interest.
"Revenue" bonds are payable from revenues derived from a particular facility,
class of facilities or the proceeds of a special excise or other tax, but not
from general tax revenues. "Moral obligation" bonds are normally issued by
special purpose public authorities. If the issuer is unable to meet its
obligations under the bonds from current revenues, it may draw on a reserve
Portfolio that is backed by the moral commitment (but not the legal obligation)
of the state or municipality that created the issuer. The Portfolio may invest
in industrial development bonds, which in most cases are revenue bonds. The
payment of the principal and interest on these bonds is dependent solely on the
ability of an initial or subsequent user of the facilities financed by the bonds
to meet its financial obligations and the pledge, if any, of real and personal
property so financed as security for such payment. Municipal notes, which may be
either "general obligation" or "revenue" securities, are short-term fixed income
securities intended to fulfill short-term capital needs of a municipality.

MUNICIPAL LEASES. Municipal leases are entered into by state and local
governments and authorities to acquire equipment and facilities such as fire and
sanitation vehicles, telecommunications equipment and other assets. Municipal
leases (which normally provide for title to the leased assets to pass eventually
to the government issuer) have evolved as a means for governmental issuers to
acquire property and equipment without meeting the constitutional and statutory
requirements for the issuance of debt. The debt-issuance limitations of many
state constitutions and statutes are deemed to be inapplicable because of the
inclusion in many leases or contracts of "non-appropriation" clauses that
provide that the governmental issuer has no obligation to make future payments
under the lease or contract unless money is appropriated for such purpose by the
appropriate legislative body on a yearly or other periodic basis.

PARTICIPATION INTERESTS. The Portfolio may purchase participation interests in
municipal securities that are owned by banks or other financial institutions.
Participation interests usually carry a demand feature backed by a letter of
credit or guarantee of the bank or institution permitting the holder to tender
them back to the bank or other institution.

TAXABLE INVESTMENTS. The Portfolio may invest up to 20% of the value of its net
assets in cash and money market instruments, the interest income on which is
subject to federal income taxation. In addition, when business or financial
conditions warrant or when an adequate supply of appropriate municipal
securities is not available, the Portfolio may assume a temporary defensive
position and invest without limit in such taxable money market instruments.

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<PAGE>

ADDITIONAL INVESTMENT POLICIES

Each Fund's and each Portfolio's investment objective and certain investment
limitations, as described in the SAI, may not be changed without approval of the
holders of a majority of the Fund's or Portfolio's, as applicable, outstanding
voting securities (as defined in the 1940 Act) (a "fundamental policy"). Except
as otherwise indicated in this Prospectus or in the SAI, investment policies of
a Fund or a Portfolio may be changed by the applicable board of trustees without
shareholder approval (a "nonfundamental policy"). Each Portfolio is permitted to
hold cash in any amount pending investment in securities and may invest in other
investment companies that intend to comply with Rule 2a-7 and have substantially
similar investment objectives and policies. To the extent a Portfolio invests in
other money funds, it will indirectly bear the expenses of those funds. A
further description of the Funds' and the Portfolios' investment policies is
contained in the SAI.

BORROWING. As a fundamental policy, each Portfolio may borrow money for
temporary or emergency purposes (including the meeting of redemption requests),
but not in excess of 33 1/3% of the value of the Portfolio's total assets. As a
fundamental policy of Government Portfolio and as a nonfundamental policy for
each other Portfolio, borrowing for purposes other than meeting redemption
requests will not exceed 5% of the value of the Portfolio's total assets.

REPURCHASE AGREEMENTS. Each Portfolio may seek additional income or liquidity by
entering into repurchase agreements. Repurchase agreements are transactions in
which a Portfolio purchases a security and simultaneously commits to resell that
security to the seller at an agreed-upon price on an agreed-upon future date,
normally one to seven days later. The resale price reflects a market rate of
interest that is not related to the coupon rate or maturity of the purchased
security. The Portfolios' custodian holds the underlying collateral, which is
maintained at not less than 100% of the repurchase price. Repurchase agreements
involve certain credit risks not associated with direct investment in
securities. The Portfolios, however, intend to enter into repurchase agreements
only with sellers which FIA believes present minimal credit risks in accordance
with guidelines established by the Core Trust Board. In the event that a seller
defaulted on its repurchase obligation, however, a Portfolio might suffer a
loss.

LIQUIDITY. To ensure adequate liquidity, each Portfolio may not invest more than
10% of its net assets in illiquid securities, including repurchase agreements
not entitling the Portfolio to payment of principal within seven days. There may
not be an active secondary market for securities held by a Portfolio. The value
of securities that have a limited market tend to fluctuate more than those that
have an active market. FIA monitors the liquidity of the Portfolios'
investments, but there can be no guarantee that an active secondary market will
exist.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. In order to assure itself of being
able to obtain securities at prices which FIA believes might not be available at
a future time, each Portfolio may purchase securities on a when-issued or
delayed delivery basis. When these transactions are negotiated, the price or
yield is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. Securities so purchased are subject
to market price fluctuation and no interest on the securities accrues to a
Portfolio until delivery and payment take place. Accordingly, the value of the
securities on the delivery date may be more or less than the purchase price.
Commitments for when-issued or delayed delivery transactions will be entered
into only when a Portfolio has the intention of actually acquiring the
securities. Failure by the other party to deliver a security purchased by a
Portfolio may result in a loss or missed opportunity to make an alternative
investment.

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<PAGE>

VARIABLE AND FLOATING RATE SECURITIES. The securities in which the Portfolios
invest may have variable or floating rates of interest. These securities pay
interest at rates that are adjusted periodically according to a specified
formula, usually with reference to some interest rate index or market interest
rate. The interest paid on these securities is a function primarily of the index
or market rate upon which the interest rate adjustments are based. Securities
with ultimate maturities of greater than 397 days may be purchased only in
accordance with the provisions of Rule 2a-7. Under that Rule, only those
long-term instruments that have demand features that comply with certain
requirements and certain long-term U.S. Government Securities may be purchased.
Similar to fixed rate debt instruments, variable and floating rate instruments
are subject to changes in value based on changes in market interest rates or
changes in the issuer's creditworthiness.

No Portfolio may purchase a variable or floating rate security whose interest
rate is adjusted based on a long-term interest rate or index, on more than one
interest rate or index, or on an interest rate or index that materially lags
behind short-term market rates (these prohibited securities are often referred
to as "derivative" securities). All variable and floating rate securities
purchased by a Portfolio will have an interest rate that is adjusted based on a
single short-term rate or index, such as the Prime Rate.

FINANCIAL INSTITUTION GUIDELINES. Treasury Cash Portfolio and Government Cash
Portfolio invest only in instruments which, if held directly by a bank or bank
holding company organized under the laws of the United States or any state
thereof, would be assigned to a risk-weight category of no more than 20% under
the current risk based capital guidelines adopted by the Federal bank
regulators. In addition, these Portfolios limit their investments to those
permissible for Federally chartered credit unions under applicable provisions of
the Federal Credit Union Act and the applicable rules and regulations of the
National Credit Union Administration. Government Cash Portfolio limits its
investments to investments that are legally permissible for Federally chartered
savings associations without limit as to percentage and to investments that
permit Fund shares to qualify as liquid assets and as short-term liquid assets.

4. MANAGEMENT

The business of the Trust is managed under the direction of the Board and the
business of Core Trust is managed under the direction the Core Trust Board. The
Board formulates the general policies of the Portfolios and meets periodically
to review the results of the Portfolios, monitor investment activities and
practices and discuss other matters affecting the Portfolios and the Trust. The
Core Trust Board performs similar functions for the Portfolios and Core Trust.
The SAI contains general background information about the trustees and officers
of the Trust and Core Trust.

ADMINISTRATION AND DISTRIBUTION

Subject to the supervision of the Board, FAdS supervises the overall management
of the Trust, including overseeing the Trust's receipt of services, advising the
Trust and the Trustees on matters concerning the Trust and its affairs, and
providing the Trust with general office facilities and certain persons to serve
as officers. For these services and facilities, FAdS receives a fee at an annual
rate of 0.05% of the daily net assets of each Portfolio. FAdS also serves as
administrator of the Portfolios and provides administrative services for each
Portfolio that are similar to those provided to the Portfolios. For its
administrative services to the Portfolios, FAdS receives a fee at an annual rate
of 0.05% of the average daily net assets of each Portfolio. Forum Accounting
Services, LLC ("FAcS") performs portfolio accounting services for the Funds and
Portfolios pursuant to agreements with the Trust and Core Trust and is paid a
separate fee for these services.

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<PAGE>

FFS acts as the agent of the Trust in connection with the offering of shares of
the Portfolios (FFSI will remain distributor until February 28, 1999). The
distributor is a registered broker-dealer and is a member of the National
Association of Securities Dealers, Inc. In order to facilitate the distribution
of Investor Shares, the Trust has adopted a plan of distribution (the "Plan")
pursuant to Rule 12b-1 under the 1940 Act with respect to each Portfolio's
Investor Shares. Under the Plan, FFS receives a fee at an annual rate of up to
0.50% of the average daily net assets of each Fund attributable to Investor
Shares (0.15% in the case of Daily Assets Government Fund) as compensation for
FFS's services as distributor. As of the date of this Prospectus, the Board has
approved a fee at an annual rate of 0.30% for each Fund (except Daily Assets
Government Fund). From this amount, FFS may make payments to various financial
institutions, including broker-dealers, banks and trust companies as
compensation for services or reimbursement of expenses in connection with the
distribution of shares or the provision of various shareholder services. If the
distribution related expenses of FFS exceed its Rule 12b-1 fees for any
Portfolio, the Portfolio will not be obligated to pay FSS an additional amount.
If FFS's distribution related expenses are less than its Rule 12b-1 fees, FSS
will realize a profit.

FAdS, FFS, FFSI, FIA, FAcS and FSS are members of the Forum Financial Group of
Companies and together provide a full range of services to the investment
company and financial services industry. As of the date of this Prospectus, each
of these companies was controlled by John Y. Keffer, President and Chairman of
the Trust and FAdS and FFS provide administration services to registered
investment companies with assets of approximately $47.7 billion.

INVESTMENT ADVISER

Subject to the general supervision of the Core Trust Board, FIA makes investment
decisions for each Portfolio and monitors the Portfolios' investments. FIA,
which is located at Two Portland Square, Portland, Maine 04101, provides
investment advisory services to seven other mutual Portfolios. Prior to January
2, 1998, Linden Asset Management, Inc. ("Linden") served as investment adviser
to Treasury Cash Portfolio, Government Cash Portfolio and Cash Portfolio and
provided professional management of those Portfolios' investments, and Forum
Advisors, Inc. served as investment adviser to Government Portfolio and provided
professional management of that Portfolio's investments. Linden and Forum
Advisors, Inc. also acted as investment subadvisers to each Portfolio that they
did not manage on a daily basis. On January 2, 1998, Forum Advisors, Inc.
acquired Linden and reorganized into FIA.

Anthony R. Fischer, Jr. is primarily responsible for the day-to-day management
of the Portfolios. Mr. Fischer was the sole stockholder and President of Linden
Asset Management, Inc. from 1992 until January 2, 1998. He has been primarily
responsible for the day-to-day management of Treasury Cash Portfolio, Government
Cash Portfolio, Cash Portfolio and Municipal Cash Portfolio since their
inception. Mr. Fischer has over twenty-five years experience in the money market
industry and during that time has managed money market investment portfolios for
various banks and investment firms.

For its services, FIA receives an advisory fee at an annual rate of 0.05% of
Government Portfolio's and Municipal Cash Portfolio's average daily net assets.
For services provided to Treasury Cash Portfolio, Government Cash Portfolio and
Cash Portfolio, FIA receives an advisory fee based upon the total average daily
net assets of those Portfolios ("Total Portfolio Assets"). FIA's fee is
calculated at an annual rate on a cumulative basis as follows: 0.06% of the
first $200 million of Total Portfolio Assets, 0.04% of the next $300 million of
Total Portfolio Assets, and 0.03% of the remaining Total Portfolio Assets. A
Fund's expenses include

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<PAGE>

the Fund's pro rata portion of the advisory fee paid by the corresponding
Portfolio.

SHAREHOLDER SERVICING

TRANSFER AND DIVIDEND DISBURSING AGENT. Shareholder inquiries and communications
concerning the Funds may be directed to FSS at the address and telephone numbers
on the first page of this Prospectus. FSS maintains an account for each
shareholder of the Funds (unless such accounts are maintained by sub-transfer
agents or other financial institutions) and performs other transfer agency and
related functions. FSS is authorized to subcontract any or all of its functions
to one or more qualified sub-transfer agents or processing agents, which may be
its affiliates, who agree to comply with the terms of FSS's agreement with the
Trust. FSS may pay those agents for their services, but no such payment will
increase FSS's compensation from the Trust. For its services, FSS is paid a fee
at an annual rate of 0.25% of the average daily net assets of each Fund
attributable to Investor Shares plus $12,000 per year for each Fund and certain
account and additional class charges and is reimbursed for certain expenses
incurred on behalf of the Funds.

SHAREHOLDER SERVICE AGENTS. The Trust has adopted a shareholder service plan
("Shareholder Service Plan") which provides that, as compensation for FAdS's
service activities with respect to the Investor Shares, the Trust shall pay FAdS
a fee at an annual rate of 0.25% of the average daily net assets attributable to
Investor Shares. FAdS is authorized to enter into shareholder servicing
agreements pursuant to which a shareholder servicing agent, on behalf of its
customers, performs certain shareholder services not otherwise provided by FSS.
As compensation for its services, the shareholder servicing agent is paid a fee
by FAdS of up to 0.25% of the average daily net assets of Investor Shares owned
by investors for which the shareholder service agent maintains a servicing
relationship. Certain shareholder servicing agents may be subtransfer or
processing agents.

Among the services provided by shareholder servicing agents are answering
customer inquiries regarding the manner in which purchases, exchanges and
redemptions of shares of the Trust may be effected and other matters pertaining
to the Trust's services; providing necessary personnel and facilities to
establish and maintain shareholder accounts and records; assisting shareholders
in arranging for processing purchase, exchange and redemption transactions;
arranging for the wiring of funds; guaranteeing shareholder signatures in
connection with redemption orders and transfers and changes in
shareholder-designated accounts; integrating periodic statements with other
customer transactions; and providing such other related services as the
shareholder may request.

EXPENSES OF THE FUNDS

Each Fund's expenses comprise Trust expenses attributable to the Fund, which are
charged to the Fund, and expenses not attributable to a particular fund of the
Trust, which are allocated among the Fund and all other funds of the Trust in
proportion to their average net assets. Each service provider in its sole
discretion may elect to waive (or continue to waive) all or any portion of its
fees, which are accrued daily and paid monthly, and may reimburse a Fund for
certain expenses. Any such waivers or reimbursements would have the effect of
increasing a Fund's performance for the period during which the waiver was in
effect and would not be recouped at a later date.

Each Fund's expenses include the service fees described in this Prospectus, the
fees and expenses of the Board, applicable insurance and bonding expenses and
state and SEC registration fees. Each Fund bears its pro rata portion of the
expenses of the Portfolio in which it invests along with all other investors in
the Portfolio.

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5. PURCHASES AND REDEMPTIONS OF SHARES

GENERAL INFORMATION

All transactions in Fund shares are effected through FSS, which accepts orders
for purchases and redemptions from shareholders of record and new investors.
Shareholders of record will receive from the Trust periodic statements listing
all account activity during the statement period. The Trust reserves the right
in the future to modify, limit or terminate any shareholder privilege, upon
appropriate notice to shareholders, and may charge a fee for certain shareholder
services, although no such fees are currently contemplated.

PURCHASES. Fund shares are sold at a price equal to their net asset value
next-determined after receipt of an order in proper form, on each Fund Business
Day. Fund shares are issued immediately after an order for the shares in proper
form, accompanied by funds on deposit at a Federal Reserve Bank ("Federal
Funds"), is accepted by FSS. Each Fund's net asset value is determined as of
4:00 p.m., Eastern time.

Fund shares become entitled to receive distributions on the day the purchase
order is accepted if the order and payment are received by FSS as follows:
<TABLE>
<S> <C> <C>
Order Must be Payment Must be
Received by Received by
----------- -----------
Daily Assets Government Fund and
Daily Assets Municipal Fund 12:00 p.m., Eastern time 4:00 p.m., Eastern time
All other Funds 2:00 p.m., Eastern time 4:00 p.m., Eastern time
</TABLE>

If a purchase order is transmitted to FSS (or the wire is received) after the
times listed above, the investor will not receive a distribution on that day. On
days that the New York Stock Exchange or Federal Reserve Bank of San Francisco
closes early or the Public Securities Association recommends that the government
securities markets close early, the Trust may advance the time by which FSS must
receive completed wire purchase orders and the cut-off times set forth above.

Each Fund reserves the right to reject any subscription for the purchase of Fund
shares. Stock certificates are issued only to shareholders of record upon their
written request and no certificates are issued for fractional shares.

REDEMPTIONS. Fund shares may be redeemed without charge at their net asset value
on any Fund Business Day. There is no minimum period of investment and no
restriction on the frequency of redemptions. Fund shares are redeemed as of the
next determination of the Fund's net asset value following receipt by FSS of the
redemption order in proper form (and any supporting documentation which FSS may
require). Shares redeemed are not entitled to receive distributions declared on
or after the day on which the redemption becomes effective.

For wire redemption orders received after 12:00 p.m., Eastern time, in the case
of Daily Assets Government Fund and Daily Assets Municipal Fund, and after 2:00
p.m., Eastern Time, in the case of each other Fund, FSS will wire proceeds the
next Fund Business Day. On days that the New York Stock Exchange or Federal
Reserve Bank of San Francisco closes early or the Public Securities Association
recommends that the government securities markets close early, the Trust may
advance the time by which FSS must receive completed wire redemption orders.

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<PAGE>

check mailed to the shareholder's record address. The right of redemption may
not be suspended nor the payment dates postponed for more than seven days after
the tender of the shares to the Fund except when the New York Stock Exchange is
closed (or when trading thereon is restricted) for any reason other than its
customary weekend or holiday closings or under any emergency or other
circumstance as determined by the SEC.

Proceeds of redemptions normally are paid in cash. However, payments may be made
wholly or partially in portfolio securities if the Board determines that payment
in cash would be detrimental to the best interests of the Fund.

The Trust employs reasonable procedures to ensure that telephone orders are
genuine (which include recording certain transactions). If the Trust did not
employ such procedures, it could be liable for any losses due to unauthorized or
fraudulent telephone instructions. Shareholders should verify the accuracy of
telephone instructions immediately upon receipt of confirmation statements.
During times of drastic economic or market changes, telephone redemption and
exchange privileges may be difficult to implement. In the event that a
shareholder is unable to reach FSS by telephone, requests may be mailed or
hand-delivered to FSS.

Due to the cost to the Trust of maintaining smaller accounts, the Trust reserves
the right to redeem, upon not less than 60 days' written notice, all shares in
any Fund account with an aggregate net asset value of less than $5,000.

PURCHASE AND REDEMPTION PROCEDURES

Investors may open an account by completing the application at the back of this
Prospectus or by contacting FSS at the address on the first page of this
Prospectus. To request shareholder services not referenced on the account
application and to change information regarding a shareholder's account (such as
addresses), investors should request an Optional Services Form from FSS.

INITIAL PURCHASE OF SHARES

There is a $10,000 minimum for initial investments in each Fund ($2,000 for
individual retirement accounts, $2,500 for exchanges).

BY MAIL. Investors may send a check made payable to the Trust along with a
completed account application to FSS. Checks are accepted at full value subject
to collection. Payment by a check drawn on any member of the Federal Reserve
System can normally be converted into Federal Funds within on the next business
day after receipt of the check. Checks drawn on some non-member banks may take
longer.

For individual or Uniform Gift to Minors Act accounts, the check or money order
used to purchase shares of a Fund must be made payable to "Forum Funds" or to
one or more owners of that account and endorsed to Forum Funds. For corporation,
partnership, trust, 401(k) plan or other non-individual type accounts, the check
used to purchase shares of a Fund must be made payable on its face to "Forum
Funds." No other method of payment by check will be accepted. All purchases must
be paid in U.S. dollars; checks must be drawn on U.S. banks. Payment by
Traveler's Checks is prohibited.

BY BANK WIRE. To make an initial investment in a Fund using the wire system for
transmittal of money among banks, an investor should first telephone the Trust
at 800-94FORUM (800-943-6786) or (207) 879-0001 to obtain an account number. The
investor should then instruct a bank to wire the investor's money immediately
to:

BankBoston
Boston, Massachusetts
ABA# 011000390
For Credit To: Forum Shareholder Services, LLC
Account #: 541-54171
Re: [Name of Fund] - Investor Shares
Account #:____________________
Account Name:_________________

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<PAGE>

The investor should then promptly complete and mail the account application. Any
investor planning to wire funds should instruct a bank early in the day so the
wire transfer can be accomplished prior to 4:00 p.m., Eastern time. There may be
a charge imposed by the bank for transmitting payment by wire, and there also
may be a charge for the use of Federal Funds.

THROUGH FINANCIAL INSTITUTIONS. Shares may be purchased and redeemed through
certain broker-dealers, banks or other financial institutions including
affiliates of FSS. These financial institutions may charge their customers a fee
for their services and are responsible for promptly transmitting purchase,
redemption and other requests to a Fund. The Trust is not responsible for the
failure of any financial institutions to promptly forward these requests.

Investors who purchase or redeem shares in this manner will be subject to the
procedures of their financial institution, which may include charges,
limitations, investment minimums, cutoff times and restrictions in addition to,
or different from, those applicable to shareholders who invest in a Fund
directly. These investors should acquaint themselves with their institution's
procedures and should read this Prospectus in conjunction with any materials and
information provided by their institution. Investors who purchase Fund shares
through a financial institution may or may not be the shareholder of record and,
subject to their institution's and the Fund's procedures, may have Fund shares
transferred into their name. Certain financial institutions may enter purchase
orders with payment to follow.

The Trust may confirm purchases and redemptions of a financial institution's
customers directly to the financial institution, which in turn will provide its
customers with such confirmations and periodic statements as may be required by
law or agreed to between the financial institution and its customers.

SUBSEQUENT PURCHASES OF SHARES

There is a $500 minimum for subsequent purchases. Subsequent purchases may be
made by mailing a check, by sending a bank wire or through a financial
institution as indicated above. Shareholders using the wire system for purchase
should first telephone the Trust at 800-94FORUM (800-943-6786) or (207) 879-0001
to notify it of the wire transfer. All payments should clearly indicate the
shareholder's name and account number.

Shareholders may purchase Fund shares at regular, preselected intervals by
authorizing the automatic transfer of funds from a designated bank account
maintained with a United States banking institution which is an Automated
Clearing House member. Under the program, existing shareholders may authorize
amounts of $250 or more to be debited from their bank account and invested in
the Fund monthly or quarterly. Shareholders may terminate their automatic
investments or change the amount to be invested at any time by written
notification to FSS.

REDEMPTION OF SHARES

Shareholders who wish to redeem shares by telephone or receive redemption
proceeds by bank wire must elect these options by properly completing the
appropriate sections of their account application. These privileges may not be
available until several days after a shareholder's application is received.
Shares for which certificates have been issued may not be redeemed by telephone.

BY MAIL. Shareholders may make a redemption in any amount by sending a written
request to FSS accompanied by any stock certificate that may have been issued to
the shareholder. All written requests for redemption must be signed by the
shareholder and, in some cases, must have a signature guarantee. All
certificates submitted for redemption must be endorsed by the shareholder and
have a signature guarantee. See "Purchases and Redemptions - Other Redemption
Matters."

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<PAGE>

BY TELEPHONE. A shareholder who has elected telephone redemption privileges may
make a telephone redemption request by calling FSS at 800-94FORUM (800-943-6786)
or (207) 879-0001 and providing the shareholder's account number, the exact name
in which the shareholder's shares are registered and the shareholder's social
security or taxpayer identification number. In response to the telephone
redemption instruction, the Fund will mail a check to the shareholder's record
address or, if the shareholder has elected wire redemption privileges, wire the
proceeds.

BY BANK WIRE. For redemptions of more than $5,000, a shareholder who has elected
wire redemption privileges may request the Fund to transmit the redemption
proceeds by Federal Funds wire to a bank account designated on the shareholder's
account application. To request bank wire redemptions by telephone, the
shareholder also must have elected the telephone redemption privilege.
Redemption proceeds are transmitted by wire on the day the redemption request in
proper form is received by FSS.

AUTOMATIC REDEMPTIONS. Shareholders may redeem Fund shares at regular,
preselected intervals by authorizing the automatic redemption of shares from
their Fund account. Redemption proceeds will be sent either by check or by
automatic transfer to a designated bank account maintained with a United States
banking institution which is an Automated Clearing House member. Under this
program, shareholders may authorize the redemption of shares in amounts of $250
or more from their account monthly or quarterly. Shareholders may terminate
their automatic redemptions or change the amount to be redeemed at any time by
written notification to FSS.

OTHER REDEMPTION MATTERS. To protect shareholders and the Funds against fraud,
signatures on certain requests must have a signature guarantee. Requests must be
made in writing and include a signature guarantee for any of the following
transactions: (1) any endorsement on a stock certificate; (2) written
instruction to redeem Shares whose value exceeds $50,000; (3) instructions to
change a shareholder's record name; (4) redemption in an account in which the
account address or account registration has changed within the last 30 days; (5)
the proceeds are not being sent to the address of record, preauthorized bank
account, or preauthorized brokerage firm account; (6) the proceeds are to be
paid to someone other than the registered owners or to an account with a
different registration; (7) change of automatic investment or redemption,
dividend election, telephone redemption or exchange option election or any other
option election in connection with the shareholder's account.

Signature guarantees may be provided by any eligible institution acceptable to
FSS, including a bank, a broker, a dealer, a national securities exchange, a
credit union, or a savings association that is authorized to guarantee
signatures. Whenever a signature guarantee is required, the signature of each
person required to sign for the account must be guaranteed. A notarized
signature is not sufficient.

FSS will deem a shareholder's account "lost" if correspondence to the
shareholder's address of record is returned as undeliverable, unless FSS
determines the shareholder's new address. When an account is deemed lost, all
distributions on the account will be reinvested in additional shares of the Fund
Portfolio. In addition, the amount of any outstanding (unpaid for six months or
more) checks for distributions that have been returned to FSS will be reinvested
and the checks will be canceled.

EXCHANGES

Shareholders may exchange their shares for Investor Shares of any other Fund,
for shares of the other funds of the Trust or for shares of any other mutual
fund administered by FAdS that participates with the Funds in the exchange
program. Exchanges are subject to the fees charged by, and

16
<PAGE>

the restrictions listed in the prospectus for, the fund into which a shareholder
is exchanging, including minimum investment requirements. The minimum amount
required to open an account in a Fund through an exchange from another fund
(other than the Funds) is $2,500. The Funds do not charge for exchanges, and
there is currently no limit on the number of exchanges a shareholder may make,
but each Fund reserves the right to limit excessive exchanges by any
shareholder. See "Additional Purchase and Redemption Information" in the SAI.

Exchanges may only be made between accounts registered in the same name. A
completed account application must be submitted to open a new account in a Fund
through an exchange if the shareholder requests any shareholder privilege not
associated with the existing account. Shareholders may only exchange into a fund
if that fund's shares may legally be sold in the shareholder's state of
residence.

The Trust (and Federal tax law) treats an exchange as a redemption of the shares
owned and the purchase of the shares of the fund being acquired. Accordingly, a
shareholder may realize a capital gain or loss with respect to the shares
redeemed. Redemptions and purchases are effected at the respective net asset
values of the two funds as next determined following receipt of proper
instructions and all necessary supporting documents by the fund whose shares are
being exchanged.

If a shareholder exchanges into a fund that imposes a sales charge, that
shareholder is required to pay the difference between that fund's sales charge
and any sales charge the shareholder has previously paid in connection with the
shares being exchanged. For example, if a shareholder paid a 2% sales charge in
connection with the purchase of the shares of a fund and then exchanged those
shares into another fund with a 3% sales charge, that shareholder would pay an
additional 1% sales charge on the exchange. Shares acquired through the
reinvestment of dividends and distributions are deemed to have been acquired
with a sales charge rate equal to that paid on the shares on which the dividend
or distribution was paid. The exchange privilege may be modified materially or
terminated by the Trust at any time upon 60 days' notice to shareholders.

BY MAIL. Exchanges may be accomplished by written instruction to FSS accompanied
by any stock certificate that may have been issued to the shareholder. All
written requests for exchanges must be signed by the shareholder (a signature
guarantee is not required) and all certificates submitted for exchange must be
endorsed by the shareholder with signature guaranteed.

BY TELEPHONE. Exchanges may be accomplished by telephone by any shareholder who
has elected telephone exchange privileges by calling FSS at 800-94FORUM
(800-943-6786) or (207) 879-0001 and providing the shareholder's account number,
the exact name in which the shareholder's shares are registered and the
shareholder's social security or taxpayer identification number.

INDIVIDUAL RETIREMENT ACCOUNTS

Each Fund (other than Daily Assets Municipal Fund) may be a suitable investment
vehicle for part or all of the assets held in individual retirement accounts
("IRAs"). The minimum initial investment for IRAs is $2,000, and the minimum
subsequent investment is $500. There are limits on the amount of tax-deductible
contributions individuals may make into the various types of IRAs. Individuals
should consult their tax advisers with respect to their specific tax situations
as well as with respect to state and local taxes and read any materials supplied
by the Funds concerning Fund sponsored IRAs.

6. DISTRIBUTIONS AND TAX MATTERS

DISTRIBUTIONS

Distributions of each Fund's net investment income are declared daily and paid
monthly following the close of the last Fund Business Day of the month. Each
type of net capital gain realized

17
<PAGE>

by a Fund, if any, will be distributed annually. Shareholders may choose to have
all distributions of net investment income reinvested in additional shares of
the Fund or received in cash. In addition, shareholders may have all
distributions of net capital gain reinvested in additional shares of the Fund or
paid in cash. All distributions are treated in the same manner for Federal
income tax purposes whether received in cash or reinvested in shares of the
Fund.

All distributions will be reinvested at the Fund's net asset value as of the
payment date of the dividend. All distributions are reinvested unless another
option is selected. All distributions not reinvested will be paid to the
shareholder in cash and may be paid more than seven days following the date on
which distribution would otherwise be reinvested.

TAXES

TAX STATUS OF THE FUNDS. Each Fund intends to qualify or continue to qualify to
be taxed as a "regulated investment company" under the Internal Revenue Code of
1986, as amended. Accordingly, no Fund will be liable for Federal income taxes
on the net investment income and capital gain distributed to its shareholders.
Because each Fund intends to distribute all of its net investment income and net
capital gain each year, the Funds should also avoid Federal excise taxes.

Distributions paid by each Fund out of its net investment income (including
realized net short-term capital gain) are taxable to the shareholders of the
Fund as ordinary income. Distributions of net capital gain (i.e., the excess of
net capital gain from capital assets held for more than one year over net losses
from capital assets held for no more than one year) will be treated in the hands
of the shareholders as long-term capital gain.

THE PORTFOLIOS. The Portfolios are not required to pay Federal income taxes on
their net investment income and capital gain, as they are treated as
partnerships for Federal income tax purposes. All interest, dividends and gains
and losses of a Portfolio are deemed to have been "passed through" to the
respective Fund in proportion to the Fund's holdings of the Portfolio,
regardless of whether such interest, dividends or gains have been distributed by
the Portfolio.

DAILY ASSETS MUNICIPAL FUND. Distributions paid by Daily Assets Municipal Fund
out of federally tax-exempt interest income earned by the Fund ("exempt-interest
dividends") generally will not be subject to federal income tax in the hands of
the Fund's shareholders. Substantially all of the distributions paid by the Fund
are anticipated to be exempt-interest dividends. Persons who are "substantial
users" or "related persons" thereof of facilities financed by private activity
securities held by the Fund, however, may be subject to federal income tax on
their pro rata share of the interest income from those securities and should
consult their tax advisers before purchasing Shares. Exempt-interest dividends
are included in the "adjusted current earnings" of corporations for purposes of
the AMT.

Interest on indebtedness incurred by shareholders to purchase or carry shares of
the Fund generally is not deductible for federal income tax purposes. Under
rules for determining when borrowed funds are used for purchasing or carrying
particular assets, shares of the Fund may be considered to have been purchased
or carried with borrowed funds even though those funds are not directly linked
to the shares.

The income from the Municipal Cash Portfolio's investments may be subject to the
AMT. Interest on certain municipal securities issued to finance "private
activities" ("private activity securities") is a "tax preference item" for
purposes of the AMT applicable to certain individuals and corporations even
though such interest will continue to be fully tax-exempt for regular federal
income tax purposes. The Portfolio may purchase private activity securities, the
interest on which may constitute a "tax preference item" for purposes of the
AMT.

STATE AND LOCAL TAXES. Daily Assets Government Fund's investment policies are
structured to provide shareholders, to the extent permissible by

18
<PAGE>

Federal and state law, with income that is exempt or excluded from income
taxation at the state and local level. Many states (by statute, judicial
decision or administrative action) do not tax dividends from a regulated
investment company that are attributable to interest on obligations of the U.S.
Treasury and certain U.S. Government agencies and instrumentalities if the
interest on those obligations would not be taxable to a shareholder that held
the obligation directly. As a result, substantially all distributions paid by
the Fund to shareholders residing in certain states will be exempt or excluded
from state income taxes. A portion of the distributions paid by the other Funds
to shareholders may be exempt or excluded from state income taxes, but these
Funds are not managed to provide any specific amount of state tax-free income to
shareholders.

The exemption for federal income tax purposes of distributions derived from
interest on municipal securities does not necessarily result in an exemption
under the income or other tax laws of any state or local taxing authority.
Shareholders of Daily Assets Municipal Fund may be exempt from state and local
taxes on distributions of tax-exempt interest income derived from obligations of
the state and/or municipalities of the state in which they reside but may be
subject to tax on income derived from the municipal securities of other
jurisdictions.

Shareholders are advised to consult with their tax advisers concerning the
application of state and local taxes to investments in a Fund which may differ
from the federal income tax consequences described above.

GENERAL. Each Fund may be required by Federal law to withhold 31% of reportable
payments (which may include taxable distributions and redemption proceeds) paid
to individuals and certain other non-corporate shareholders. Withholding is not
required if a shareholder certifies that the shareholder's social security or
tax identification number provided to a Fund is correct and that the shareholder
is not subject to backup withholding.

Each Fund must include a portion of the original issue discount of zero-coupon
securities, if any, as income even though these securities do not pay any
interest until maturity. Because each Fund distributes all of its net investment
income, a Fund may have to sell portfolio securities to distribute imputed
income, which may occur at a time when the investment adviser would not have
chosen to sell such securities and which may result in a taxable gain or loss.

Shortly after the close of each year, a statement is sent to each shareholder of
the Funds advising the shareholder of the portions of total distributions paid
to the shareholder that is: (1) derived from each type of obligation in which a
Fund has invested; (2) derived from the obligations of issuers in the various
states; and (3) exempt from federal income taxes. These portions are determined
for the entire year and on a monthly basis and, thus, are an annual or monthly
average, rather than a day-by-day determination for each shareholder.

The foregoing is only a summary of some of the important Federal and state tax
considerations generally affecting the Funds and their shareholders. There may
be other Federal, state or local tax considerations applicable to a particular
investor. Prospective investors are urged to consult their tax advisers.

7. OTHER INFORMATION

PERFORMANCE INFORMATION

Investor Shares' performance may be advertised. All performance information is
based on historical results, is not intended to indicate future performance and,
unless otherwise indicated, is net of all expenses. The Funds may advertise
yield, which shows the rate of income a Fund has earned on its investments as a
percentage of the Fund's share price. To calculate yield, a Fund takes the
interest income it earned from its portfolio of investments for a specified
period (net of expenses), divides it by the average number of shares entitled to
receive distributions, and expresses the result as an annualized percentage

19
<PAGE>

rate based on the Fund's share price at the end of the period. A Fund's
compounded annualized yield assumes the reinvestment of distributions paid by
the Fund, and, therefore will be somewhat higher than the annualized yield for
the same period. A Fund may also quote tax-equivalent yields, which show the
taxable yields a shareholder would have to earn to equal the Fund's tax-free
yield, after taxes. A tax-equivalent yield is calculated by dividing the Fund's
tax-free yield by one minus a stated federal, state or combined federal and
state tax rate. Each class' performance will vary.

The Funds' advertisements may also reference ratings and rankings among similar
funds by independent evaluators such as Morningstar(R), Lipper Analytical
Services, Inc. or IBC Financial Data, Inc. In addition, the performance of the
Funds may be compared to recognized indices of market performance. The
comparative material found in a Fund's advertisements, sales literature, or
reports to shareholders may contain performance rankings. This material is not
to be considered representative or indicative of future performance.

BANKING LAW MATTERS

Banking laws and regulations generally permit a bank or bank affiliate to
purchase shares of an investment company as agent for and upon the order of a
customer and permit a bank or bank affiliate to perform sub-transfer agent or
similar services for the Trust and its shareholders. If a bank or bank affiliate
were prohibited from performing all or a part of the foregoing services, its
shareholder customers would be permitted to remain shareholders of the Trust and
alternative means for continuing to service them would be sought.

DETERMINATION OF NET ASSET VALUE

The Trust determines the net asset value per share of each Fund as of 4:00 p.m.,
Eastern time, on each Fund Business Day by dividing the value of the Fund's net
assets (the value of its interest in the Portfolio and other assets less its
liabilities) by the number of shares outstanding at the time the determination
is made. In order to more easily maintain a stable net asset value per share,
each Portfolio's portfolio securities are valued at their amortized cost
(acquisition cost adjusted for amortization of premium or accretion of discount)
in accordance with Rule 2a-7. The Portfolios will only value their portfolio
securities using this method if the Core Trust Board believes that it fairly
reflects the market-based net asset value per share. The Portfolios' other
assets, if any, are valued at fair value by or under the direction of the Core
Trust Board.

THE TRUST AND ITS SHARES

The Trust is registered with the SEC as an open-end, management investment
company and was organized as a business trust under the laws of the State of
Delaware on August 29, 1995. On January 5, 1996 the Trust succeeded to the
assets and liabilities of Forum Funds, Inc., which was incorporated in 1980. The
Board has the authority to issue an unlimited number of shares of beneficial
interest of separate series with no par value per share and to create classes of
shares within each series. There are currently twenty-two series of the Trust.

20
<PAGE>

or state law. Shareholders (and Trustees) have available certain procedures for
the removal of Trustees. There are no conversion or preemptive rights in
connection with shares of the Trust. All shares when issued in accordance with
the terms of the offering will be fully paid and nonassessable. Shares are
redeemable at net asset value, at the option of the shareholders. A shareholder
in a fund is entitled to the shareholder's pro rata share of all distributions
arising from that fund's assets and, upon redeeming shares, will receive the
portion of the fund's net assets represented by the redeemed shares.

As of December 1, 1998, Bank of New Hampshire may be deemed to have controlled
Daily Assets Treasury Obligations Fund and Daily Assets Municipal Fund, H.M.
Payson & Co. may be deemed to have controlled Daily Assets Government Fund,
Peoples Heritage Bank may be deemed to have controlled Daily Assets Treasury
Obligations Fund, Daily Assets Government Obligations Fund and Daily Assets Cash
Fund, and National City Bank of Evansville may be deemed to have controlled
Daily Assets Cash Fund through investment in the Funds by their customers From
time to time, these shareholders or other shareholders may own a large
percentage of shares of a Fund and accordingly, may be able to greatly affect
(if not determine) the outcome of a shareholder vote.

FUND STRUCTURE

OTHER CLASSES OF SHARES. In addition to Investor Shares, each Fund may create
and issue shares of other classes of securities. Each Fund currently has two
other classes of shares authorized, Institutional Shares and Institutional
Service Shares. Institutional Shares have an investment minimum of $1,000,000.
Institutional Service Shares are offered solely through banks, trust companies
and certain other financial institutions, and their affiliates and
correspondents, for investment of their funds or funds for which they act in a
fiduciary, agency or custodial capacity. Institutional Shares and Institutional
Service Shares incur less expenses than Investor Shares. See "Additional
Information" below. Except for certain differences, each share of each class
represents an undivided, proportionate interest in a Fund. Each share of each
Fund is entitled to participate equally in distributions and the proceeds of any
liquidation of that Fund except that, due to the differing expenses borne by the
various classes, the amount of distributions will differ among the classes.

CORE TRUST STRUCTURE. Each Fund invests all of its assets in its corresponding
Portfolio of Core Trust, a business trust organized under the laws of the State
of Delaware in September 1994 and registered under the 1940 Act as an open-end,
management investment company. Accordingly, a Portfolio directly acquires its
own securities and its corresponding Fund acquires an indirect interest in those
securities. The assets of each Portfolio belong only to, and the liabilities of
the Portfolio are borne solely by, the Portfolio and no other portfolio of Core
Trust. Upon liquidation of a Portfolio, investors in the Portfolio would be
entitled to share pro rata in the net assets of the Portfolio available for
distribution to investors.

THE PORTFOLIOS. A Fund's investment in a Portfolio is in the form of a
non-transferable beneficial interest. As of the date of this Prospectus, Daily
Assets Government Fund and Daily Assets Municipal Fund are the only investors
(other than FAdS or its affiliates) that have invested in Government Portfolio
and Municipal Cash Portfolio, respectively. Each of the other Portfolios has
another investor besides the Funds (and FAdS and its affiliates). All investors
in a Portfolio invest on the same terms and conditions as the Funds and will pay
a proportionate share of the Portfolio's expenses. The Portfolios normally will
not hold meetings of investors except as required by the 1940 Act. Each investor
in a Portfolio is entitled to vote in proportion to the relative value of its
interest in the Portfolio. On most issues subject to a vote of investors, as
required by the 1940 Act and other applicable law, a Fund will solicit proxies
from shareholders of the Fund and will vote its interest in a Portfolio in
proportion to the votes cast by its shareholders. There can be no assurance

21
<PAGE>

that
any issue that receives a majority of the votes cast by a Fund's shareholders
will receive a majority of votes cast by all investors in the Portfolio.

CONSIDERATIONS OF INVESTING IN A PORTFOLIO. A Fund's investment in a Portfolio
may be affected by the actions of other large investors in the Portfolio, if
any. If a large investor other than a Fund redeemed its interest in a Portfolio,
the Portfolio's remaining investors (including the Fund) might, as a result,
experience higher pro rata operating expenses, thereby producing lower returns.
A Fund may withdraw its entire investment from a Portfolio at any time, if the
Board determines that it is in the best interests of the Fund and its
shareholders to do so. The Fund might withdraw, for example, if other investors
in the Portfolio, by a vote of shareholders, changed the investment objective or
policies of the Portfolio in a manner not acceptable to the Board or not
permissible by the Fund. A withdrawal could result in a distribution in kind of
portfolio securities (as opposed to a cash distribution) by the Portfolio. If
the Fund decided to convert those securities to cash, it usually would incur
transaction costs. If the Fund withdrew its investment from the Portfolio, the
Board would consider what action might be taken, including the management of the
Fund's assets in accordance with its investment objective and policies by the
investment adviser to the Portfolio or the investment of all of the Fund's
investable assets in another pooled investment entity having substantially the
same investment objective as the Fund. The inability of the Fund to find a
suitable replacement investment, in the event the Board decided not to permit
the Portfolio's investment adviser to manage the Fund's assets, could have a
significant impact on shareholders of the Fund.

ADDITIONAL INFORMATION. Each class of a Fund (and any other investment company
that invests in a Portfolio) may have a different expense ratio and different
sales charges, including distribution fees, and each class' (and investment
company's) performance will be affected by its expenses and sales charges. For
more information on any other class of shares of the Funds or concerning any
other investment companies that invest in a Portfolio, investors may contact FFS
at 207-879-1900. If an investor invests through a financial institution, the
investor may also contact their financial institution to obtain information
about the other classes or any other investment company investing in a
Portfolio.

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, THE SAI AND THE
FUNDS' OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFERING OF THE FUNDS'
SHARES, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER
MAY NOT LAWFULLY BE MADE.

22
<PAGE>

[Forum Funds - Investor Shares Account Application]

<PAGE>

[Picture graphics on right half of back
cover of glob w/map as background.]

[Logo]

SHAREHOLDER INFORMATION:
Forum Shareholder Services, LLC
P.O. Box 446
Portland, ME 04112
207-879-0001 (IN PORTLAND, ME)
800-94FORUM (ELSEWHERE)

<PAGE>

PROSPECTUS
------------------------------
INSTITUTIONAL
SHARES
------------------------------

Daily Assets
Government
Obligations Fund

Daily Assets
Cash Fund

Daily Assets
Municipal fund

FORUM
FUNDS

JANUARY 1, 1999

<PAGE>

FORUM FUNDS
Daily Assets Treasury Obligations Fund
Daily Assets Government Fund
Daily Assets Government Obligations Fund
Daily Assets Cash Fund
Daily Assets Municipal Fund

PROSPECTUS
January 1, 1999
- --------------------------------------------------------------------------------
THIS PROSPECTUS OFFERS INSTITUTIONAL SHARES OF DAILY ASSETS TREASURY OBLIGATIONS
FUND, DAILY ASSETS GOVERNMENT FUND, DAILY ASSETS GOVERNMENT OBLIGATIONS FUND,
DAILY ASSETS CASH FUND AND DAILY ASSETS MUNICIPAL FUND (EACH A "FUND"). EACH
FUND IS A DIVERSIFIED NO-LOAD, MONEY MARKET PORTFOLIO OF FORUM FUNDS (THE
"TRUST"), A REGISTERED OPEN-END, MANAGEMENT INVESTMENT COMPANY. EACH FUND SEEKS
TO PROVIDE ITS SHAREHOLDERS WITH HIGH CURRENT INCOME (WHICH, IN THE CASE OF
DAILY ASSETS MUNICIPAL FUND, IS EXEMPT FROM FEDERAL INCOME TAXES) TO THE EXTENT
CONSISTENT WITH THE PRESERVATION OF CAPITAL AND THE MAINTENANCE OF LIQUIDITY.

INVESTORS SHOULD READ THIS PROSPECTUS AND RETAIN IT FOR FUTURE REFERENCE.
<TABLE>
<CAPTION>

TABLE OF CONTENTS
<S> <C> <C> <C>
1. Prospectus Summary...................... 2 5. Purchases and Redemptions of Shares...... 12
2. Financial Highlights.................... 4 6. Distributions and Tax Matters............ 16
3. Investment Objectives and Policies...... 5 7. Other Information........................ 18
4. Management.............................. 10
</TABLE>

<PAGE>

1. PROSPECTUS SUMMARY

HIGHLIGHTS OF THE FUNDS

This prospectus offers shares of the Institutional class ("Institutional
Shares") of each of the Funds. The Funds operate in accordance with the
provisions of Rule 2a-7 under the Investment Company Act of 1940 (the "1940
Act"). Each Fund invests all of its investable assets in a separate portfolio
(each a "Portfolio") of Core Trust (Delaware), an open-end, management
investment company ("Core Trust") as follows:

Accordingly, the investment experience of each Fund will correspond directly
with the investment experience of its corresponding Portfolio. See "Other
Information - Fund Structure." Each Fund currently offers three separate classes
of shares: Institutional Shares, Institutional Service Shares and Investor
Shares. Institutional Shares are sold through this Prospectus. Institutional
Service Shares and Investor Shares are each offered by a separate prospectus.
See "Other Information -- Fund Structure -- Other Classes of Shares."

MANAGEMENT. Forum Administrative Services, LLC ("FAdS") supervises the overall
management of the Funds and the Portfolios and Forum Fund Services, LLC ("FFS")
is the distributor of the Funds' shares (Forum Financial Services, Inc. ("FFSI")
through February 28, 1999). Forum Investment Advisors, LLC ("FIA") is the
investment adviser of each Portfolio and provides professional management of the
Portfolios' investments. The Funds' transfer agent, dividend disbursing agent
and shareholder servicing agent is Forum Shareholder Services, LLC ("FSS"). See
"Management" for a description of the services provided and fees charged to the
Funds.

PURCHASES AND REDEMPTIONS. The minimum initial investment in Institutional
Shares is $1,000,000. Institutional Shares may be purchased and redeemed Monday
through Friday, between 8:00 a.m. and 6:00 p.m., Eastern time, except on the
following holidays (or the days on which they are observed): New Year's Day,
Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Columbus Day, Veterans' Day, Thanksgiving and
Christmas ("Fund Business Days"). To be eligible to receive that day's income,
purchase orders must be received by FSS in good order no later than 2:00 p.m.,
Eastern time (noon in the case of Daily Assets Government Fund and Daily Assets
Municipal Fund). Shareholders may have redemption proceeds over $5,000
transferred by bank wire to a designated bank account. To be able to receive
redemption proceeds by wire on the day of the redemption, redemption orders must
be received by FSS in good order no later than 2:00 p.m., Eastern time (noon in
the case of Daily Assets Government Fund and Daily Assets Municipal Fund). All
times may be changed without notice by Fund management due to market activities.
See "Purchases and Redemptions of Shares."

Shares of one or more of the Funds may not be currently offered for sale in your
state.

EXCHANGES. Shareholders of a Fund may exchange Institutional Shares without
charge for Institutional Shares of the other Funds. See "Purchases and
Redemptions of Shares - Exchanges."

INVESTMENT CONSIDERATIONS. There can be no assurance that any Fund will be able
to maintain a stable net asset value of $1.00 per share. Although
2
<PAGE>

the Funds invest only in money market instruments, all securities, including
U.S. Government Securities, involve some level of investment risk. An investment
in a Fund is not insured by the FDIC, nor is it insured or guaranteed against
loss of principal.

EXPENSES OF INVESTING IN THE FUNDS

The purpose of the following table is to assist investors in understanding the
various expenses that an investor in Institutional Shares will bear directly or
indirectly. There are no transaction expenses associated with purchases,
redemptions or exchanges of Fund shares.

ANNUAL FUND OPERATING EXPENSES(1)
(as a percentage of average net assets)
<TABLE>
<S> <C> <C> <C> <C> <C>
Daily Assets Daily Assets Daily Assets Daily Assets Daily Assets
Treasury Government Government Cash Municipal
Obligations Fund Fund Obligations Fund Fund Fund
---------------- ---- ---------------- ---- ----
Management Fees(2) 0.14% 0.15% 0.14% 0.14% 0.15%
Other Expenses(3)
(after expense reimbursements) 0.06% 0.05% 0.06% 0.06% 0.05%
----- ----- ----- ----- -----
Total Operating Expenses 0.20% 0.20% 0.20% 0.20% 0.20%
</TABLE>

(1) For a further description of the various expenses incurred in the
operation of the Funds and the Portfolios, see "Management." The amount of fees
and expenses for each Fund is based on estimated expenses for the Funds' fiscal
year ending August 31, 1999. Each Fund's expenses include the Fund's pro rata
portion of all expenses of its corresponding Portfolio, which are borne
indirectly by Fund shareholders.

(2) Management Fees include all administration and investment advisory fees
incurred by the Funds and the Portfolios.

(3) Absent estimated reimbursements by FIA and its affiliates, Other
Expenses and Total Fund Operating Expenses would be: 0.15% and 0.29%,
respectively, for Daily Assets Treasury Obligations Fund; 0.17 % and 0.32%,
respectively, for Daily Assets Government Fund; 0.17% and 0.31%, respectively,
for Daily Assets Government Obligations Fund; 0.19% and 0.33%, respectively, for
Daily Assets Cash Fund; and 0.19% and 0.34%, respectively, for Daily Assets
Municipal Fund. Expense reimbursements are voluntary and may be reduced or
eliminated at any time.

EXAMPLE

Following is a hypothetical example that indicates the dollar amount of expenses
that an investor in Institutional Shares would pay assuming: (1) the investment
of all of the Fund's assets in the Portfolio; (2) a $1,000 investment in the
Fund; (3) a 5% annual return; (4) the reinvestment of all distributions; and (5)
redemption at the end of each period:

One Three Five Ten
Year Years Years Years
---- ----- ----- -----
Each Fund $2 $6 $11 $26

3
<PAGE>

2. FINANCIAL HIGHLIGHTS

The following information represents selected data for a single outstanding
Institutional Share of the Funds for the period indicated. Prior to offering
Institutional Shares, Daily Assets Government Fund and Daily Assets Cash Fund
had commenced operations; selected data for a single outstanding Institutional
Service Share of the Funds since their inception is also shown. Information for
each of the years or periods ended August 31 was audited by KPMG LLP,
independent auditors, whose report dated October 6, 1998 expressed an
unqualified opinion on this information. Information for Daily Assets Government
Fund for each of the years or periods prior to March 31, 1997 was audited by
other independent auditors. The financial statements and independent auditors'
report thereon for the fiscal year ended August 31, 1998 are included in the
Funds' annual report and are incorporated by reference into the SAI and may be
obtained from the Trust without charge.

As of August 31, 1998, Treasury Cash Portfolio, Government Portfolio, Government
Cash Portfolio, Cash Portfolio and Municipal Cash Portfolio had net assets of
$264,844,947, $46,762,986, $717,124,357, $607,340,844, and $20,834,474
respectively.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>

Ratio to Average
Net Assets
----------------
Beginning Distributions Ending Net
Net Asset Net From Net Asset Net
Value Per Investment Investment Value Per Net Investment Total
Share Income Income Share Expenses Income Return
----- ------ ------ ----- -------- ------ ------
DAILY ASSETS TREASURY OBLIGATIONS FUND
INSTITUTIONAL SHARES
Period Ended August 31, 1998 (2) $1.00 0.03 (0.03) $1.00 0.20%(3) 5.41%(3) 3.34%

DAILY ASSETS GOVERNMENT FUND
INSTITUTIONAL SHARES
Period Ended August 31, 1998 (2) $1.00 0.01 (0.01) $1.00 0.20%(3) 5.26%(3) 0.89%

INSTITUTIONAL SERVICE SHARES
Year Ended August 31, 1998 $1.00 0.05 (0.05) $1.00 0.46% 4.93% 5.04%
April 1, 1997 to August 31, 1997 1.00 0.02 (0.02) 1.00 0.50%(3) 4.76%(3) 2.01%
Year Ended March 31, 1997 1.00 0.05 (0.05) 1.00 0.50% 4.70% 4.80%
Year Ended March 31, 1996 1.00 0.05 (0.05) 1.00 0.50% 5.01% 5.18%
Year Ended March 31, 1995 1.00 0.04 (0.04) 1.00 0.37% 4.45% 4.45%
Year Ended March 31, 1994 1.00 0.03 (0.03) 1.00 0.33% 2.82% 2.83%
July 1, 1992 to March 31, 1993 1.00 0.02 (0.02) 1.00 0.22%(3) 2.92%(3) 3.13%(3)

DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
INSTITUTIONAL SHARES
Period Ended August 31, 1998 (2) $1.00 0.03 (0.03) $1.00 0.20%(3) 5.43%(3) 3.24%

DAILY ASSETS CASH FUND
INSTITUTIONAL SHARES
Period Ended August 31, 1998 (2) $1.00 0.03 (0.03) $1.00 0.20%(3) 5.46%(3) 2.70%

INSTITUTIONAL SERVICE SHARES
Year Ended August 31, 1998 $1.00 0.05 (0.05) $1.00 0.46% 5.22% 5.34%
October 1, 1996 to August 31, 1997 1.00 0.05 (0.05) 1.00 0.52%(3) 5.06%(3)% 4.70%

DAILY ASSETS MUNICIPAL FUND
INSTITUTIONAL SHARES
Period Ended August 31, 1998 (2) $1.00 0.01 (0.01) $1.00 0.12%(3) 3.16%(3) 0.59%

</TABLE>

Net Assets Ratio of
End of Gross
Period Expenses
(000s to Average
Omitted) Net Assets (1)
------- --------------

$110,561 0.47%(3)

$ 36,095 0.69%(3)

$ 9,485 0.91%
44,116 0.95%(3)
43,975 0.99%
43,103 1.06%
36,329 1.10%
26,505 1.17%
2.43%(3)
4,687

$ 15,352 0.74%(3)

$ 28,396 0.68%(3)

$ 5,235 0.90%
12,076 1.22%(3)

$ 20,773 1.26%(3)

</TABLE>

(1) The ratio of Gross Expenses to Average Net Assets reflects the expense
ratio excluding any fee waivers and expense reimbursements for the Fund and
its respective Portfolio.

(2) The Trust commenced the offering of the Institutional Share Class of Daily
Assets Treasury Obligations Fund, Daily Assets Government Fund, Daily
Assets Government Obligations Fund, Daily Assets Cash Fund, and Daily
Assets Municipal Fund on January 22, 1998, July 1, 1998, January 30, 1998,
March 13, 1998, and June 25, 1998, respectively.

(3) Annualized.

4
<PAGE>

3. INVESTMENT OBJECTIVES AND POLICIES

INVESTMENT OBJECTIVE

THERE CAN BE NO ASSURANCE THAT ANY FUND OR PORTFOLIO WILL ACHIEVE ITS INVESTMENT
OBJECTIVE OR MAINTAIN A STABLE NET ASSET VALUE.

INVESTMENT POLICIES

Each Fund invests only in instruments that have a remaining maturity of 397 days
or less (as calculated under Rule 2a-7 of the 1940 Act) and maintains a
dollar-weighted average portfolio maturity of 90 days or less. Except to the
limited extent permitted by Rule 2a-7 and except for U.S. Government Securities,
each Portfolio will not invest more than 5% of its total assets in the
securities of any one issuer. As used herein, "U.S. Government Securities" means
obligations issued or guaranteed as to principal and interest by the United
States government, its agencies or instrumentalities and "Treasury Securities"
means U.S. Treasury bills and notes and other U.S. Government Securities which
are guaranteed as to principal and interest by the U.S. Treasury.

5
<PAGE>

creditworthiness or the issuer's ability to meet its obligations.

DAILY ASSETS TREASURY OBLIGATIONS FUND

Treasury Cash Portfolio seeks to attain its investment objective by investing
substantially all of its assets in Treasury Securities and in repurchase
agreements backed by Treasury Securities.

DAILY ASSETS GOVERNMENT FUND

DAILY ASSETS GOVERNMENT OBLIGATIONS FUND

DAILY ASSETS CASH FUND

Cash Portfolio seeks to attain its investment objective by investing in a broad
spectrum of money market instruments. The Portfolio may invest in: (1)
obligations of domestic financial institutions; (2) U.S. Government Securities
(see "Investment Objectives and Policies - Daily Assets Government Fund"); and
(3) corporate debt obligations of domestic issuers.

6
<PAGE>

DAILY ASSETS MUNICIPAL FUND

THE SHORT-TERM MUNICIPAL SECURITIES MARKET. The Portfolio may invest a
substantial portion of its portfolio in municipal securities supported by credit
and liquidity enhancements (i.e., letters of credit not covered by federal
deposit insurance or put or demand features of third party financial
institutions, generally domestic and foreign banks). The Portfolio's policy is
to purchase municipal securities with third party credit or liquidity support
only after FIA has considered the creditworthiness of the financial institution
providing the support and believes that the security presents minimal credit
risk. Such investments will expose the Portfolio to risks pertaining to the
banking industry, including the foreign banking industry, such as interest rate
and credit risk.

The Portfolio may purchase variable rate demand notes ("VRDN") which are
municipal bonds with maturities of up to 40 years that are sold with a demand
feature (an option for the holder of the security to sell the security back to
the issuer). They may be exercised by the security holder at predetermined
intervals, usually daily or weekly. The interest rate on the security is
typically reset by a remarketing or similar agent at prevailing interest rates.
Tender option bonds (also referred to as certificates of participation) are
municipal securities with relatively long original maturities and fixed rates of
interest that are coupled with an agreement of a third party financial
institution to grant the security holders an option to tender the securities to
the institution and receive the face value thereof. The option may be exercised
at periodic intervals, usually six

7
<PAGE>

months to a year. These bonds effectively provide the holder with a demand
obligation that bears interest at the prevailing short-term municipal securities
interest rate.

MUNICIPAL BONDS AND NOTES. Municipal bonds are long term fixed-income
securities. "General obligation" bonds are secured by the issuer's pledge of its
full faith, credit and taxing power for the payment of principal and interest.
"Revenue" bonds are payable from revenues derived from a particular facility,
class of facilities or, the proceeds of a special excise or other tax, but not
from general tax revenues. "Moral obligation" bonds are normally issued by
special purpose public authorities. If the issuer is unable to meet its
obligations under the bonds from current revenues, it may draw on a reserve fund
that is backed by the moral commitment (but not the legal obligation) of the
state or municipality that created the issuer. The Portfolio may invest in
industrial development bonds, which in most cases are revenue bonds. The payment
of the principal and interest on these bonds is dependent solely on the ability
of an initial or subsequent user of the facilities financed by the bonds to meet
its financial obligations and the pledge, if any, of real and personal property
so financed as security for such payment. Municipal notes, which may be either
"general obligation" or "revenue" securities, are short-term fixed income
securities intended to fulfill short-term capital needs of a municipality.

8
<PAGE>

ADDITIONAL INVESTMENT POLICIES

Each Fund's and each Portfolio's investment objective and certain investment
limitations, as described herein and in the SAI, may not be changed without
approval of the holders of a majority of the Fund's or Portfolio's, as
applicable, outstanding voting securities (as defined in the 1940 Act) (a
"fundamental policy"). Except as otherwise indicated in this Prospectus or in
the SAI, investment policies of a Fund or a Portfolio may be changed by the
applicable board of trustees without shareholder approval (a "nonfundamental
policy"). Each Portfolio is permitted to hold cash in any amount pending
investment in securities and may invest in other investment companies that
intend to comply with Rule 2a-7 and have substantially similar investment
objectives and policies. To the extent a Portfolio invets in other money funds,
it will indirectly bear the expenses of those funds. A further description of
the Funds' and the Portfolios' investment policies is contained in the SAI.

BORROWING. As a fundamental investment policy, each Portfolio may borrow money
for temporary or emergency purposes (including the meeting of redemption
requests), but not in excess of 33 1/3% of the value of the Portfolio's total
assets. As a fundamental policy for Government Portfolio and as a nonfundamental
policy for each other Portfolio, borrowing for purposes other than meeting
redemption requests will not exceed 5% of the value of the Portfolio's total
assets.

WHEN-ISSUED SECURITIES. In order to assure itself of being able to obtain
securities at prices which FIA believes might not be available at a future time,
each Portfolio may purchase securities on a when-issued or delayed delivery
basis. When these transactions are negotiated, the price or yield is fixed at
the time the commitment is made, but delivery and payment for the securities
take place at a later date. Securities so purchased are subject to market price
fluctuation and no interest on the securities accrues to a Portfolio until
delivery and payment take place. Accordingly, the value of the securities on the
delivery date may be more or less than the purchase price. Commitments for
when-issued or delayed delivery transactions will be entered into only when a
Portfolio has the intention of actually acquiring the securities. Failure by the
other party to deliver a security purchased by a Portfolio may result in a

9
<PAGE>

loss or missed opportunity to make an alternative investment.

4. MANAGEMENT

The business of the Trust is managed under the direction of the Board and the
business of Core Trust is managed under the direction the Core Trust Board. The
Board formulates the general policies of the Funds and meets periodically to
review the results of the Funds, monitor investment activities and practices and
discuss other matters affecting the Funds and the Trust. The Core Trust Board
performs similar functions for the Portfolios and Core Trust. The SAI contains
general background information about the trustees and officers of the Trust and
Core Trust.

ADMINISTRATION AND DISTRIBUTION

Subject to the supervision of the Board, FAdS supervises the overall management
of the Trust, including overseeing the Trust's receipt of services, advising the
Trust and the Trustees on matters concerning the Trust and its affairs, and
providing the Trust with general office facilities and certain persons to serve
as officers. For these services and facilities, FAdS receives a fee at an annual
rate of 0.05% of the daily net assets of each Fund. FAdS also serves as
administrator of the Portfolios and provides administrative services for each
Portfolio that are similar to those provided to the Funds. For its
administrative services to the Portfolios, FAdS receives a fee at an annual rate
of 0.05% of the average daily net assets of each Portfolio. Forum Accounting
Services, LLC ("FAcS") performs portfolio accounting services for the Funds and
Portfolios pursuant to agreements with the

10
<PAGE>

Trust and Core Trust and is paid a separate fee for these services.

FFS acts as the agent of the Trust in connection with the offering of shares of
the Funds but receives no compensation for these services (FFSI will remain
distributor until February 28, 1999). The distributor is a registered
broker-dealer and is a member of the National Association of Securities Dealers,
Inc.

FAdS, FFS, FFSI, FIA, FAcS and FSS are members of the Forum Financial Group of
Companies and together provide a full range of services to the investment
company and financial services industry. As of the date of this Prospectus, each
of these companies was controlled by John Y. Keffer, President and Chairman of
the Trust, and FAdS and FFS provided administration services to registered
investment companies with assets of approximately $47.7 billion.

INVESTMENT ADVISER

Subject to the general supervision of the Core Trust Board, FIA makes investment
decisions for each Portfolio and monitors the Portfolios' investments. FIA,
which is located at Two Portland Square, Portland, Maine 04101, provides
investment advisory services to seven other mutual funds. Prior to January 2,
1998, Linden Asset Management, Inc. ("Linden") served as investment adviser to
Treasury Cash Portfolio, Government Cash Portfolio and Cash Portfolio and
provided professional management of those Portfolios' investments, and Forum
Advisors, Inc. served as investment adviser to Government Portfolio and provided
professional management of that Portfolio's investments. Linden and Forum
Advisors, Inc. also acted as investment subadvisers to each Portfolio that they
did not manage on a daily basis. On January 2, 1998, Forum Advisors, Inc.
acquired Linden and reorganized into FIA.

SHAREHOLDER SERVICING

Shareholder inquiries and communications concerning the Funds may be directed to
FSS at the address and telephone numbers on the first page of this Prospectus.
FSS maintains an account for each shareholder of the Funds (unless such accounts
are maintained by sub-transfer agents or other financial institutions) and
performs other transfer agency and related functions. FSS is authorized to
subcontract any or all of its functions to one or more qualified sub-transfer
agents or processing agents, which may be its affiliates, who agree to comply
with the terms of FSS's agreement with the Trust. FSS may pay those agents for
their services, but no such payment will increase FSS's compensation from the
Trust. For its services, FSS is paid a transfer agent fee at an

11
<PAGE>

annual rate of 0.05% of the average daily net assets of each Fund attributable
to Institutional Shares plus $12,000 per year for each Fund and certain account
and additional class charges and is reimbursed for certain expenses incurred on
behalf of the Funds.

<PAGE>

EXPENSES OF THE FUNDS

5. PURCHASES AND REDEMPTIONS OF SHARES

GENERAL INFORMATION

REDEMPTIONS. Fund shares may be redeemed without charge at their net asset value
on any Fund Business Day. There is no minimum

12
<PAGE>

period of investment and no restriction on the frequency of redemptions. Fund
shares are redeemed as of the next determination of the Fund's net asset value
following receipt by FSS of the redemption order in proper form (and any
supporting documentation which FSS may require). Shares redeemed are not
entitled to receive distributions declared on or after the day on which the
redemption becomes effective.

For wire redemption orders received after 12:00 p.m., Eastern time, in the case
of Daily Assets Government Fund and Daily Assets Municipal Fund, and after 2:00
p.m., Eastern time, in the case of each other Fund, FSS will wire proceeds the
next Fund Business Day. On days that the New York Stock Exchange or Federal
Reserve Bank of San Francisco closes early or the Public Securities Association
recommends that the government securities markets close early, the Trust may
advance the time by which FSS must receive completed wire redemption orders.

Normally, redemption proceeds are paid immediately, but in no event later than
seven days, following acceptance of a redemption order. Proceeds of redemption
requests (and exchanges), however, will not be paid unless any check used to
purchase the shares has been cleared by the shareholder's bank, which may take
up to 15 calendar days. This delay may be avoided by investing through wire
transfers. Unless otherwise indicated, redemption proceeds normally are paid by
check mailed to the shareholder's record address. The right of redemption may
not be suspended nor the payment dates postponed for more than seven days after
the tender of the shares to the Fund except when the New York Stock Exchange is
closed (or when trading thereon is restricted) for any reason other than its
customary weekend or holiday closings or under any emergency or other
circumstance as determined by the SEC.

PURCHASE AND REDEMPTION PROCEDURES

INITIAL PURCHASE OF SHARES

There is a $1,000,000 minimum for initial investments in each Fund.

13
<PAGE>

receipt of the check. Checks drawn on some non-member banks may take longer.

BankBoston
Boston, Massachusetts
ABA# 011000390
For Credit To: Forum Shareholder Services, LLC
Account #: 541-54171
Re: [Name of Fund] - Institutional Shares
Account #:_____________________
Account Name:__________________

The investor should then promptly complete and mail the account application. Any
investor planning to wire funds should instruct a bank early in the day so the
wire transfer can be accomplished prior to 4:00p.m, Eastern time. There may be a
charge imposed by the bank for transmitting payment by wire, and there also may
be a charge for the use of Federal Funds.

THROUGH FINANCIAL INSTITUTIONS. Shares may be purchased and redeemed through
certain broker-dealers, banks or other financial institutions, including
affiliates of FSS. These financial institutions may charge their customers a fee
for their services and are responsible for promptly transmitting purchase,
redemption and other requests to a Fund. The Trust is not responsible for the
failure of any financial institution to promptly forward these requests.

SUBSEQUENT PURCHASES OF SHARES

Subsequent purchases may be made by mailing a check, by sending a bank wire or
through a financial institution as indicated above. Shareholders using the wire
system for purchase should first telephone the Trust at 800-94FORUM
(800-943-6786) or (207) 879-0001 to notify it of the wire transfer. All payments
should clearly indicate the shareholder's name and account number.

Shareholders may purchase Fund shares at regular, preselected intervals by
authorizing the

14
<PAGE>

automatic transfer of funds from a designated bank account maintained with a
United States banking institution which is an Automated Clearing House member.
Under the program, existing shareholders may authorize amounts of $250 or more
to be debited from their bank account and invested in the Fund monthly or
quarterly. Shareholders may terminate their automatic investments or change the
amount to be invested at any time by written notification to FSS.

REDEMPTION OF SHARES

BY MAIL. Shareholders may make a redemption in any amount by sending a written
request to FSS accompanied by any stock certificate that may have been issued to
the shareholder. All written requests for redemption must be signed by the
shareholder and in some cases must have a signature guarantee. All certificates
submitted for redemption must be endorsed by the shareholder with signature
guaranteed. See "Purchases and Redemptions of Shares - Other Redemption
Matters."

FSS will deem a shareholder's account "lost" if correspondence to the
shareholder's address of

15
<PAGE>

record is returned as undeliverable, unless FSS determines the shareholder's new
address. When an account is deemed lost, all distributions on the account will
be reinvested in additional shares of the Fund. In addition, the amount of any
outstanding (unpaid for six months or more) checks for distributions that have
been returned to FSS will be reinvested and the checks will be canceled.

EXCHANGES

Shareholders may exchange their shares for Institutional Shares of any other
Fund. Exchanges are subject to the fees charged by, and the restrictions listed
in the prospectus for, the fund into which a shareholder is exchanging,
including minimum investment requirements. The Funds do not charge for
exchanges, and there is currently no limit on the number of exchanges a
shareholder may make, but each Fund reserves the right to limit excessive
exchanges by any shareholder. See "Additional Purchase and Redemption
Information" in the SAI.

6. DISTRIBUTIONS AND TAX MATTERS

DISTRIBUTIONS

Distributions of each Fund's net investment income are declared daily and paid
monthly following the close of the last Fund Business Day of the month. Each
type of net capital gain realized by a Fund, if any, will be distributed
annually. Shareholders may choose to have all distributions of net investment
income reinvested in additional shares of the Fund or received in cash. In
addition, shareholders may have all distributions of net capital gain reinvested
in additional shares of the Fund or paid in cash. All distributions are treated
in the same manner for Federal income tax purposes whether received in cash or
reinvested in shares of the Fund.

16
<PAGE>

following the date on which distribution would otherwise be reinvested.

TAXES

Distributions paid by each Fund out of its net investment income (including
realized net short-term capital gain) are taxable to the shareholders of the
Fund as ordinary income. Distributions of net capital gain (i.e., the excess of
net gain from capital assets held more than one year over net losses from
capital assets held for no more than one year) will be treated in the hands of
the shareholders as long-term capital gain regardless of how long a shareholder
has held shares in the Fund.

The income from the Portfolio's investments may be subject to the AMT. Interest
on certain municipal securities issued to finance "private activities" ("private
activity securities") is a "tax preference item" for purposes of the AMT
applicable to certain individuals and corporations even though such interest
will continue to be fully tax-exempt for regular federal income tax purposes.
The Portfolio may purchase private activity securities, the interest on which
may constitute a "tax preference item" for purposes of the AMT.

17
<PAGE>

substantially all distributions paid by the Fund to shareholders residing in
certain states will be exempt or excluded from state income taxes. A portion of
the distributions paid by the other Funds to shareholders may be exempt or
excluded from state income taxes, but these Funds are not managed to provide any
specific amount of state tax-free income to shareholders.

Shortly after the close of each year, a statement is sent to each shareholder of
the Funds advising the shareholder of the portion of total distributions paid to
the shareholder that is: (1) derived from each type of obligation in which a
Fund has invested; (2) derived from the obligations of issuers in the various
states; and (3) exempt from federal income taxes. These portions are determined
for the entire year and on a monthly basis and, thus, are an annual or monthly
average, rather than a day-by-day determination for each shareholder.

7. OTHER INFORMATION

PERFORMANCE INFORMATION

Institutional Shares' performance may be advertised. All performance information
is based on historical results, is not intended to indicate future performance
and, unless otherwise indicated, is net of all expenses. The Funds may advertise
yield, which shows the rate of income a Fund has earned on its investments as a
percentage of the Fund's share price. To calculate yield, a Fund takes the
interest income it earned from its portfolio of investments for a specified
period (net of expenses), divides it by the average number of shares entitled to
receive distributions, and expresses the result as an annualized percentage rate
based on the Fund's share price at the end of the period. A Fund's compounded
annualized yield assumes the reinvestment of distributions paid by the Fund,
and, therefore will be somewhat higher than the annualized yield for the same

18
<PAGE>

period. A Fund may also quote tax-equivalent yields, which show the taxable
yields a shareholder would have to earn to equal the Fund's tax-free yield,
after taxes. A tax-equivalent yield is calculated by dividing the Fund's
tax-free yield by one minus a stated federal, state or combined federal and
state tax rate. Each class' performance will vary.

BANKING LAW MATTERS

DETERMINATION OF NET ASSET VALUE

THE TRUST AND ITS SHARES

19
<PAGE>

be held only when specifically required by Federal or state law. Shareholders
(and Trustees) have available certain procedures for the removal of Trustees.
There are no conversion or preemptive rights in connection with shares of the
Trust. All shares when issued in accordance with the terms of the offering will
be fully paid and nonassessable. Shares are redeemable at net asset value, at
the option of the shareholders. A shareholder in a fund is entitled to the
shareholder's pro rata share of all distributions arising from that fund's
assets and, upon redeeming shares, will receive the portion of the fund's net
assets represented by the redeemed shares.

As of December 1, 1998, Bank of New Hampshire may be deemed to have controlled
Daily Assets Treasury Obligations and Daily Assets Municipal Fund, H.M. Payson &
Co. may be deemed to have controlled Daily Assets Government Fund, Peoples
Heritage Bank may be deemed to have controlled Daily Assets Treasury Obligations
Fund, Daily Assets Government Obligations Fund and Daily Assets Cash Fund, and
National City Bank of Evansville may be deemed to have controlled and Daily
Assets Cash Fund through investment in the Funds by their customers. From time
to time, these shareholders or other shareholders may own a large percentage of
the shares of a Fund and accordingly, may be able to greatly affect (if not
determine) the outcome of a shareholder vote.

FUND STRUCTURE

OTHER CLASSES OF SHARES. In addition to Institutional Shares, each Fund may
create and issue shares of other classes of securities. Each Fund currently has
two other classes of shares authorized, Institutional Service Shares and
Investor Shares. Institutional Services Shares are offered solely through banks,
trust companies and certain other financial institutions, and their affiliates
and correspondents, for investment of their funds or funds for which they act in
a fiduciary, agency or custodial capacity. Investor Shares are offered to the
general public, have a $10,000 minimum investment and bear shareholder service
and distribution fees. Institutional Service Shares and Investor Shares incur
more expenses than Institutional Shares. See, "Additional Information" below.
Except for certain differences, each share of each class represents an
undivided, proportionate interest in a Fund. Each share of each Fund is entitled
to participate equally in distributions and the proceeds of any liquidation of
that Fund except that, due to the differing expenses borne by the various
classes, the amount of distributions will differ among the classes.

20
<PAGE>

vote in proportion to the relative value of its interest in the Portfolio. On
most issues subject to a vote of investors, as required by the 1940 Act and
other applicable law, a Fund will solicit proxies from shareholders of the Fund
and will vote its interest in a Portfolio in proportion to the votes cast by its
shareholders. There can be no assurance that any issue that receives a majority
of the votes cast by a Fund's shareholders will receive a majority of votes cast
by all investors in the Portfolio.

ADDITIONAL INFORMATION. Each class of a Fund (and any other investment company
that invests in a Portfolio) may have a different expense ratio and different
sales charges, including distribution fees, and each class' (and investment
company's) performance will be affected by its expenses and sales charges. For
more information on any other class of shares of the Funds or concerning any
other investment companies that invest in a Portfolio, investors may contact FFS
at 207-879-1900. If an investor invests through a financial institution, the
investor may also contact the investor's financial institution to obtain
information about the other classes or any other investment company investing in
a Portfolio.

21
<PAGE>

(This page has been left blank intentionally.)

22
<PAGE>

[Forum Funds - Insitutional Shares Account Application]

23
<PAGE>

[Picture graphics on right half of back
cover of glob w/map as background.]

[Logo]

SHAREHOLDER INFORMATION:
Forum Shareholder Services, LLC
P.O. Box 446
Portland, ME 04112
207-879-0001 (IN PORTLAND, ME)
800-94FORUM (ELSEWHERE)

<PAGE>

PROSPECTUS
------------------------------
INSTITUTIONAL
SERVICE SHARES
------------------------------

Daily Assets
Government
Obligations Fund

Daily Assets
Cash Fund

Daily Assets
Municipal fund

FORUM
FUNDS

JANUARY 1, 1999

<PAGE>

FORUM FUNDS
Daily Assets Treasury Obligations Fund
Daily Assets Government Fund
Daily Assets Government Obligations Fund
Daily Assets Cash Fund
Daily Assets Municipal Fund

PROSPECTUS
January 1, 1999
- --------------------------------------------------------------------------------
THIS PROSPECTUS OFFERS INSTITUTIONAL SERVICE SHARES OF DAILY ASSETS TREASURY
OBLIGATIONS FUND, DAILY ASSETS GOVERNMENT FUND, DAILY ASSETS GOVERNMENT
OBLIGATIONS FUND, DAILY ASSETS CASH FUND AND DAILY ASSETS MUNICIPAL FUND (EACH A
"FUND"). EACH FUND IS A DIVERSIFIED NO-LOAD, MONEY MARKET PORTFOLIO OF FORUM
FUNDS (THE "TRUST"), A REGISTERED, OPEN-END, MANAGEMENT INVESTMENT COMPANY. EACH
FUND SEEKS TO PROVIDE ITS SHAREHOLDERS WITH HIGH CURRENT INCOME (WHICH, IN THE
CASE OF DAILY ASSETS MUNICIPAL FUND, IS EXEMPT FROM FEDERAL INCOME TAXES) TO THE
EXTENT CONSISTENT WITH THE PRESERVATION OF CAPITAL AND THE MAINTENANCE OF
LIQUIDITY.

INVESTORS SHOULD READ THIS PROSPECTUS AND RETAIN IT FOR FUTURE REFERENCE.
<TABLE>
<CAPTION>

TABLE OF CONTENTS
<S> <C> <C> <C>
1. Prospectus Summary...................... 2 5. Purchases and Redemptions of Shares...... 13
2. Financial Highlights.................... 5 6. Distributions and Tax Matters............ 18
3. Investment Objectives and Policies...... 6 7. Other Information........................ 20
4. Management.............................. 11
</TABLE>

<PAGE>

1. PROSPECTUS SUMMARY

HIGHLIGHTS OF THE FUNDS

This Prospectus offers shares of the Institutional Service class ("Institutional
Service Shares") of each of the Funds. Institutional Services Shares are offered
solely through banks, trust companies and certain other financial institutions,
and their affiliates and correspondents, for investment of their funds or funds
for which they act in a fiduciary, agency or custodial capacity. The Funds
operate in accordance with the provisions of Rule 2a-7 under the Investment
Company Act of 1940 (the "1940 Act"). Each Fund invests all of its investable
assets in a separate portfolio (each a "Portfolio") of Core Trust (Delaware), an
open-end, management investment company ("Core Trust") as follows:

Accordingly, the investment experience of each Fund will correspond directly
with the investment experience of its corresponding Portfolio. See "Other
Information - Fund Structure." Each Fund currently offers three separate classes
of shares: Institutional Shares, Institutional Service Shares and Investor
Shares. Institutional Service Shares are sold through this Prospectus.
Institutional Shares and Investor Shares are each offered by a separate
prospectus.See "Other Information -- Fund Structure -- Other Classes of Shares."

MANAGEMENT. Forum Administrative Services, LLC ("FAdS") supervises the overall
management of the Funds and the Portfolios and Forum Fund Services, LLC. ("FFS")
is the distributor of the Funds' shares (Forum Financial Services, In. ("FFSI")
through February 28, 1999). Forum Investment Advisors, LLC ("FIA") is the
investment adviser of each Portfolio and provides professional management of the
Portfolios' investments. The Funds' transfer agent, dividend disbursing agent
and shareholder servicing agent is Forum Shareholder Services, LLC ("FSS"). See
"Management" for a description of the services provided and fees charged to the
Funds.

SHAREHOLDER SERVICING. The Trust has adopted a Shareholder Service Plan relating
to Institutional Service Shares under which FAdS is compensated for various
shareholder servicing activities. See "Management - Shareholder Servicing" and
"- Administration and Distribution."

PURCHASES AND REDEMPTIONS. The minimum initial investment in Institutional
Service Shares is $100,000. Institutional Service Shares may be purchased and
redeemed Monday through Friday, between 8:00 a.m. and 6:00 p.m., Eastern time,
except on the following holidays (or the days on which they are observed): New
Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Columbus Day, Veterans' Day, Thanksgiving and
Christmas ("Fund Business Days"). To be eligible to receive that day's income,
purchase orders must be received by FSS in good order no later than 2:00 p.m.,
Eastern time (noon in the case of Daily Assets Government Fund and Daily Assets
Municipal Fund). Shareholders may have redemption proceeds over $5,000
transferred by bank wire to a designated bank account. To be able to receive
redemption proceeds by wire on the day of the redemption, redemption orders must
be received by FSS in good order no later than 2:00 p.m., Eastern time (noon in
the case of Daily Assets Government Fund and Daily Assets Municipal Fund). All
times may be changed without notice by Fund management due to market activities.
See "Purchases and Redemptions of Shares."

Shares of one or more of the Fund may not be offered for sale in your state.

EXCHANGES. Shareholders of a Fund may exchange Institutional Service Shares
without charge for Institutional Service Shares of the other Funds and for
shares of certain mutual funds not

2
<PAGE>

offered by this Prospectus. See "Purchases and Redemptions of Shares -
Exchanges."

INVESTMENT CONSIDERATIONS. There can be no assurance that any Fund will be able
to maintain a stable net asset value of $1.00 per share. Although the Funds
invest only in money market instruments, all securities, including U.S.
Government Securities, involve some level of investment risk. An investment in a
Fund is not insured by the FDIC, nor is it insured or guaranteed against loss of
principal.

EXPENSES OF INVESTING IN THE FUNDS

The purpose of the following table is to assist investors in understanding the
various expenses that an investor in Institutional Service Shares will bear
directly or indirectly. There are no transaction expenses associated with
purchases, redemptions or exchanges of Fund shares.

ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)(1)
<TABLE>
<S> <C> <C> <C> <C> <C>
Daily Assets Daily Assets Daily Assets Daily Assets Daily Assets
Treasury Government Government Cash Municipal
Obligations Fund Fund Obligations Fund Fund Fund
---------------- ---- ---------------- ---- ----
Management Fees(2) 0.14% 0.11% 0.14% 0.09% 0.15%
Other Expenses(3)
(after expense reimbursements) 0.31% 0.35% 0.31% 0.37% 0.30%
----- ----- ----- ----- -----
Total Operating Expenses 0.45% 0.46% 0.45% 0.46% 0.45%
</TABLE>

(1) For a further description of the various expenses incurred in the
operation of the Funds and the Portfolios, see "Management." The amount of fees
and expenses for Daily Assets Government Fund and Daily Assets Cash Fund is
based on the Funds' expenses for the last fiscal year ended August 31, 1998; the
amount of expenses for each other Fund is based on estimated annualized expenses
for the Funds' fiscal year ending August 31, 1999. Each Fund's expenses include
the Fund's pro rata portion of all expenses of its corresponding Portfolio,
which are borne indirectly by Fund shareholders.
(2) Management Fees include all administration fees and investment advisory
fees incurred by the Funds and the Portfolios. Absent fee waivers, Management
Fees would be 0.17% for Daily Assets Government Fund and 0.15% for Daily Assets
Cash Fund.
(3) Absent estimated expense reimbursements by FIA and its affiliates,
Other Expenses and Total Operating Expenses would be: 0.36% and 0.50%,
respectively, for Daily Assets Treasury Obligations Fund; 0.40% and 0.54%,
respectively, for Daily Assets Government Obligations Fund; and 0.43% and 0.58%,
respectively, for Daily Assets Municipal Fund. Absent actual reimbursements or
waivers by FIA and its affiliates, Other Expenses and Total Operating Expenses
would be 0.74% and 0.91%, respectively, for Daily Assets Government Fund and
0.75% and 0.90%, respectively, for Daily Assets Cash Fund. Expense
reimbursements are voluntary and may be reduced or eliminated at any time.

EXAMPLE

Following is a hypothetical example that indicates the dollar amount of expenses
that an investor in Institutional Service Shares would pay assuming: (1) the
investment of all of the Fund's assets in the Portfolio; (2) a $1,000 investment
in the Fund; (3) a 5% annual return; (4) the reinvestment of all distributions;
and (5) redemption at the end of each period:

<PAGE>

<TABLE>
<S> <C> <C> <C> <C>
One Three Five Ten
Year Years Years Years
---- ----- ----- -----
Daily Assets Treasury Obligations Fund $5 $14 $25 $57
Daily Assets Government Fund $5 $15 $26 $58
Daily Assets Government Obligations Fund $5 $14 $25 $57
Daily Assets Cash Fund $5 $15 $26 $58
Daily Assets Municipal Fund $5 $14 $25 $57
</TABLE>

3
<PAGE>

4
<PAGE>

2. FINANCIAL HIGHLIGHTS

The following information represents selected data for a single outstanding
Institutional Service Share of the Funds for the periods indicated. Information
for each of the years or periods ended August 31 was audited by KPMG LLP,
independent auditors, whose report dated October 6, 1998 expressed an
unqualified opinion on this information. Information for Daily Assets Government
Fund for each of the years or periods prior to March 31, 1997 was audited by
other independent auditors. The Funds' financial statements and independent
auditors' report thereon for the fiscal year ended August 31, 1998 are included
in the Funds' annual report, which is incorporated by reference into the SAI and
may be obtained from the Trust without charge.

As of August 31, 1998, Treasury Cash Portfolio, Government Portfolio, Government
Cash Portfolio, Cash Portfolio and Municipal Cash Portfolio had net assets of
$264,844,947, $46,762,986, $717,124,357, $607,340,844, and $20,834,474
respectively.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>

Ratio to Average
Net Assets

Beginning Distributions Ending Net
Net Asset Net From Net Asset Net
Value Per Investment Investment Value Per Net Investment Total
Share Income Income Share Expenses Income Return
----- ------ ------ ----- -------- ------ ------
DAILY ASSETS TREASURY OBLIGATIONS FUND
INSTITUTIONAL SERVICE SHARES
Period Ended August 31, 1998(2) $1.00 0.02 (0.02) $1.00 0.45%(3) 5.16%(3) 2.19%

DAILY ASSETS GOVERNMENT FUND
INSTITUTIONAL SERVICE SHARES
Year Ended August 31, 1998 $1.00 0.05 (0.05) $1.00 0.46% 4.93% 5.04%
April 1, 1997 to August 31, 1997 1.00 0.02 (0.02) 1.00 0.50%(3) 4.76%(3) 2.01%
Year Ended March 31, 1997 1.00 0.05 (0.05) 1.00 0.50% 4.70% 4.80%
Year Ended March 31, 1996 1.00 0.05 (0.05) 1.00 0.50% 5.01% 5.18%
Year Ended March 31, 1995 1.00 0.04 (0.04) 1.00 0.37% 4.45% 4.45%
Year Ended March 31, 1994 1.00 0.03 (0.03) 1.00 0.33% 2.82% 2.83%
July 1, 1992 to March 31, 1993 1.00 0.02 (0.02) 1.00 0.22%(3) 2.92%(3) 3.13%(3)

DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
INSTITUTIONAL SERVICE SHARES
Period Ended August 31, 1998(2) $1.00 0.02 (0.02) $1.00 0.45%(3) 5.16%(3) 2.22%

DAILY ASSETS CASH FUND
INSTITUTIONAL SERVICE SHARES
Year Ended August 31, 1998 $1.00 0.05 (0.05) $1.00 0.46% 5.22% 5.34%
October 1, 1996 to August 31, 1997 1.00 0.05 (0.05) 1.00 0.52%(3) 5.06%(3)% 4.70%

DAILY ASSETS MUNICIPAL FUND
INSTITUTIONAL SERVICE SHARES
Period Ended August 31, 1998(2)_ $1.00 - - $1.00 0.59%(3) 2.76%(3) 0.20%
</TABLE>

Net Assets Ratio of
End of Gross
Period Expenses
(000s to Average
Omitted) Net Assets(1)
-------- -------------

$ 4,448 1.53%(3)

$ 9,485 0.91%
44,116 0.95%(3)
43,975 0.99%
43,103 1.06%
36,329 1.10%
26,505 1.17%
4,687 2.43%(3)

$ 2,390 2.13%(3)

$ 5,235 0.90%
12,076 1.22%(3)

$ 10 721.84%(3)
</TABLE>

(1) The ratio of Gross Expenses to Average Net Assets reflects the expense
ratio in the absence of any fee waivers and expense reimbursements for the
Fund and its respective Portfolio.

(2) The Trust commenced the offering of the Institutional Service Share class
of Daily Assets Treasury Obligations Fund, Daily Assets Government
Obligations Fund, and Daily Assets Municipal Fund on April 1, 1998, March
30, 1998 and August 6, 1998, respectively.

(3) Annualized.

5
<PAGE>

3. INVESTMENT OBJECTIVES AND POLICIES

INVESTMENT OBJECTIVE

THERE CAN BE NO ASSURANCE THAT ANY FUND OR PORTFOLIO WILL ACHIEVE ITS INVESTMENT
OBJECTIVE OR MAINTAIN A STABLE NET ASSET VALUE.

INVESTMENT POLICIES

6
<PAGE>

DAILY ASSETS TREASURY OBLIGATIONS FUND

Treasury Cash Portfolio seeks to attain its investment objective by investing
substantially all of its assets in Treasury Securities and in repurchase
agreements backed by Treasury Securities.

DAILY ASSETS GOVERNMENT FUND

Among the U.S. Government Securities in which the Portfolio may invest are U.S.
Treasury Securities and obligations of the Farm Credit System, Farm Credit
System Financial Assistance Corporation, Federal Financing Bank, Federal Home
Loan Banks, General Services Administration, Student Loan Marketing Association,
and Tennessee Valley Authority. Income on these obligations and the obligations
of certain other agencies and instrumentalities is generally not subject to
state and local income taxes by Federal law. In addition, the income received by
Portfolio shareholders that is attributable to these investments will also be
exempt in most states from state and local income taxes. Shareholders should
determine through consultation with their own tax advisers whether and to what
extent dividends payable by the Portfolio from interest received with respect to
its investments will be considered to be exempt from state and local income
taxes in the shareholder's state. Shareholders similarly should determine
whether the capital gain and other income, if any, payable by the Portfolio will
be subject to state and local income taxes in the shareholder's state. See
"Distributions and Tax Matters."

DAILY ASSETS GOVERNMENT OBLIGATIONS FUND

DAILY ASSETS CASH FUND

Cash Portfolio seeks to attain its investment objective by investing in a broad
spectrum of money market instruments. The Portfolio may invest in (1)
obligations of domestic financial institutions, (2) U.S. Government Securities
(see "Investment Objectives and Policies - Daily Assets Government Fund") and
(3) corporate debt obligations of domestic issuers.

Financial institution obligations include negotiable certificates of deposit,
bank notes, bankers' acceptances and time deposits of banks (including savings
banks and savings associations) and their foreign branches. The Portfolio limits
its investments in bank obligations to banks which at the time of investment
have total assets in excess of one billion dollars. Certificates of deposit
represent an institution's obligation to repay funds deposited with it that earn
a specified interest rate over a given period. Bank notes are debt obligations

7
<PAGE>

of a bank. Bankers' acceptances are negotiable obligations of a bank to pay a
draft which has been drawn by a customer and are usually backed by goods in
international trade. Time deposits are non-negotiable deposits with a banking
institution that earn a specified interest rate over a given period.
Certificates of deposit and fixed time deposits, which are payable at the stated
maturity date and bear a fixed rate of interest, generally may be withdrawn on
demand by the Portfolio but may be subject to early withdrawal penalties which
could reduce the Portfolio's yield.

DAILY ASSETS MUNICIPAL FUND

The Portfolio may purchase variable rate demand notes ("VRDN") which are
municipal bonds with maturities of up to 40 years that are sold with a demand
feature (an option for the holder of the security to sell the security back to
the issuer). They may be exercised by the security holder at predetermined
intervals, usually daily or weekly. The interest rate on the security is
typically reset by a remarketing or similar agent at prevailing interest rates.
Tender option bonds (also referred to as certificates of participation) are
municipal securities with relatively long original maturities and fixed rates of
interest that are coupled with an agreement of a third party financial
institution to grant the security holders the option to tender the securities to
the institution and receive the face value thereof. The option may be exercised
at periodic intervals, usually six months to a year. These bonds effectively
provide the holder with a demand obligation that bears interest at the
prevailing short-term municipal securities interest rate.

The Portfolio also may acquire "puts" on municipal securities it purchases. A
put gives the

8
<PAGE>

Portfolio the right to sell the municipal security at a specified price at any
time before a specified date. The Portfolio will acquire puts only to enhance
liquidity, shorten the maturity of the related municipal security or permit the
Portfolio to invest its funds at more favorable rates.

MUNICIPAL BONDS AND NOTES. Municipal bonds are long term fixed-income
securities. "General obligation" bonds are secured by a municipality's pledge of
its full faith, credit and taxing power for the payment of principal and
interest. "Revenue" bonds are usually payable only from the revenues derived
from a particular facility or class of facilities or, in some cases, from the
proceeds of a special excise or other tax, but not from general tax revenues.
Under a "moral obligation" bond (which is normally issued by special purpose
public authorities), if the issuer is unable to meet its obligations under the
bonds from current revenues, it may draw on a reserve fund that is backed by the
moral commitment (but not the legal obligation) of the state or municipality
that created the issuer. The Portfolio may invest in industrial development
bonds, which in most cases are revenue bonds. The payment of the principal and
interest on these bonds is dependent solely on the ability of an initial or
subsequent user of the facilities financed by the bonds to meet its financial
obligations and the pledge, if any, of real and personal property so financed as
security for such payment. Municipal notes, which may be either "general
obligation" or "revenue" securities, are short-term fixed income securities
intended to fulfill short-term capital needs of a municipality.

ADDITIONAL INVESTMENT POLICIES

Each Fund's and each Portfolio's investment objective and certain investment
limitations, as described in the SAI, may not be changed without approval of the
holders of a majority of the Fund's

9
<PAGE>

or Portfolio's, as applicable, outstanding voting securities (as defined in the
1940 Act)(a "fundamental policy"). Except as otherwise indicated in this
Prospectus or SAI, investment policies of a Fund or of a Portfolio may be
changed by the applicable board of trustees without shareholder approval (a
"nonfundamental policy"). Each Portfolio is permitted to hold cash in any amount
pending investment in securities and may invest in other investment companies
that intend to comply with Rule 2a-7 and have substantially similar investment
objectives and policies. To the extent a Portfolio invests in other money funds,
it will indirectly bear the expenses of those funds. A further description of
the Funds' and the Portfolios' investment policies is contained in the SAI.

10
<PAGE>

is a function primarily of the index or market rate upon which the interest rate
adjustments are based. Securities with ultimate maturities of greater than 397
days may be purchased only in accordance with the provisions of Rule 2a-7. Under
that Rule, only those long-term instruments that have demand features that
comply with certain requirements and certain long-term U.S. Government
Securities may be purchased. Similar to fixed rate debt instruments, variable
and floating rate instruments are subject to changes in value based on changes
in market interest rates or changes in the issuer's creditworthiness.

4. MANAGEMENT

The business of the Trust is managed under the direction of the Board and the
business of Core Trust is managed under the direction the Core Trust Board. The
Board formulates the general policies of the Funds and meets periodically to
review the results of the Funds, monitor investment activities and practices and
discuss other matters affecting the Funds and the Trust. The Core Trust Board
performs similar functions for the Portfolios and Core Trust. The SAI contains
general background information about the trustees and officers of the Trust and
Core Trust.

ADMINISTRATION AND DISTRIBUTION

Subject to the supervision of the Board, FAdS supervises the overall management
of the Trust, including overseeing the Trust's receipt of services, advising the
Trust and the Trustees on matters concerning the Trust and its affairs, and
providing the Trust with general office facilities and certain persons to serve
as officers. For these services and facilities, FAdS receives a fee at an annual
rate of 0.05% of the daily net assets of each Fund. FAdS also serves as
administrator of the Portfolios and provides administrative services for each
Portfolio that are similar to those provided to the Funds. For its
administrative services to the Portfolios, FAdS receives a fee at an annual rate
of 0.05% of the average daily net assets of each Portfolio. Forum Accounting
Services, LLC ("FAcS") performs portfolio accounting services for the Funds and
Portfolios pursuant to agreements with the Trust and Core Trust and is paid a
separate fee for these services.

FAdS, FFS, FFSI, FIA, FAcS and FSS are members of the Forum Financial Group of

11
<PAGE>

companies and together provide a full range of services to the investment
company and financial services industry. As of the date of this Prospectus, each
of these companies was controlled by John Y. Keffer, President and Chairman of
the Trust, and FAdS and FFS provided administration services to registered
investment companies with assets of approximately $47.7 billion.

INVESTMENT ADVISER

Subject to the general supervision of the Core Trust Board, FIA makes investment
decisions for each Portfolio and monitors the Portfolios' investments. FIA,
which is located at Two Portland Square, Portland, Maine 04101, provides
investment advisory services to seven other mutual funds. Prior to January 2,
1998, Linden Asset Management, Inc. ("Linden") served as investment adviser to
Treasury Cash Portfolio, Government Cash Portfolio and Cash Portfolio and
provided professional management of those Portfolios' investments, and Forum
Advisors, Inc. served as investment adviser to Government Portfolio and provided
professional management of that Portfolio's investments. Linden and Forum
Advisors, Inc. also acted as investment subadvisers to each Portfolio that they
did not manage on a daily basis. On January 2, 1998, Forum Advisors, Inc.
acquired Linden and reorganized into FIA.

SHAREHOLDER SERVICING

TRANSFER AND DIVIDEND DISBURSING AGENT. Shareholder inquiries and communications
concerning the Funds may be directed to FSS at the address and telephone numbers
on the first page of this Prospectus. FSS maintains an account for each
shareholder of the Funds (unless such accounts are maintained by sub-transfer
agents or other financial institutions) and performs other transfer agency and
related functions. FSS is authorized to subcontract any or all of its functions
to one or more qualified sub-transfer agents or processing agents, which may be
its affiliates, who agree to comply with the terms of FSS's agreement with the
Trust. FSS may pay those agents for their services, but no such payment will
increase FSS's compensation from the Trust. For its services, FSS is paid a
transfer agent fee at an annual rate of 0.10% of the average daily net assets of
each Fund attributable to Institutional Service Shares plus $12,000 per year for
each Fund and certain account and additional class charges and is reimbursed for
certain expenses incurred on behalf of the Funds.

12
<PAGE>

Service Shares. FAdS is authorized to enter into shareholder servicing
agreements pursuant to which a shareholder servicing agent, on behalf of its
customers, performs certain shareholder services not otherwise provided by FSS.
As compensation for its services, the shareholder servicing agent is paid a fee
by FAdS of up to 0.25% of the average daily net assets of Institutional Service
Shares owned by investors for which the shareholder service agent maintains a
servicing relationship. Certain shareholder servicing agents may be subtransfer
or processing agents.

EXPENSES OF THE FUNDS

5. PURCHASES AND REDEMPTIONS OF SHARES

GENERAL INFORMATION

Fund shares become entitled to receive distributions on the day the purchase
order is accepted

13
<PAGE>

if the order and payment are received by FSS as follows:
<TABLE>
<S> <C> <C>
Order Must be Payment Must be
Received by Received by
----------- -----------
Daily Assets Government Fund and
Daily Assets Municipal Fund 12:00 p.m., Eastern time 4:00 p.m., Eastern time
All other Funds 2:00 p.m., Eastern time 4:00 p.m., Eastern time
</TABLE>

14
<PAGE>

PURCHASE AND REDEMPTION PROCEDURES

INITIAL PURCHASE OF SHARES

There is a $100,000 minimum for total initial investments by any financial
institution in each Fund.

BY MAIL. Investors may send a check made payable to the Trust along with a
completed account application to FSS. Checks are accepted at full value subject
to collection. Payment by a check drawn on any member of the Federal Reserve
System can normally be converted into Federal Funds on the next business day
after receipt of the check. Checks drawn on some non-member banks may take
longer.

For individual or Uniform Gift to Minors Act accounts, the check or money order
used to purchase shares of a Fund must be made payable to "Forum Funds" or to
one or more owners of that account and endorsed to Forum Funds. For corporation,
partnership, trust, 401(k) plan or other non-individual type accounts, the check
used to purchase shares of a Fund must be made payable on its face to "Forum
Funds". No other method of payment by check will be accepted. All purchases must
be paid in U.S. dollars; checks must be drawn on U.S. banks. Payment by
Traveler's Checks is prohibited.

BankBoston
Boston, Massachusetts
ABA# 011000390
For Credit To: Forum Shareholder Services, LLC
Account #: 541-54171
Re: [Name of Fund] - Institutional Service Shares
Account #:____________________
Account Name:_________________

15
<PAGE>

any materials and information provided by their institution. Investors who
purchase Fund shares through a financial institution may or may not be the
shareholder of record and, subject to their institution's and the Fund's
procedures, may have Fund shares transferred into their name. Certain financial
institutions may enter purchase orders with payment to follow.

SUBSEQUENT PURCHASES OF SHARES

REDEMPTION OF SHARES

16
<PAGE>

stock certificate; (2) written instruction to redeem Shares whose value exceeds
$50,000; (3) instructions to change a shareholder's record name; (4) redemption
in an account in which the account address or account registration has changed
within the last 30 days; (5) the proceeds are not being sent to the address of
record, preauthorized bank account, or preauthorized brokerage firm account; (6)
the proceeds are to be paid to someone other than the registered owners or to an
account with a different registration; (7) change of automatic investment or
redemption, dividend election, telephone redemption or exchange option election
or any other option election in connection with the shareholder's account.

FSS will deem a shareholder's account "lost" if correspondence to the
shareholder's address of record is returned as undeliverable, unless FSS
determines the shareholder's new address. When an account is deemed lost all
distributions on the account will be reinvested in additional shares of the
Fund. In addition, the amount of any outstanding (unpaid for six months or more)
checks for distributions that have been returned to FSS will be reinvested and
the checks will be canceled.

EXCHANGES

Shareholders may exchange their shares for Institutional Service Shares of any
other Fund or for shares of any other mutual fund administered by FAdS that
participates with the Funds in the exchange program. Exchanges are subject to
the fees charged by, and the restrictions listed in the prospectus for, the fund
into which a shareholder is exchanging, including minimum investment
requirements. The Funds do not charge for exchanges, and there is currently no
limit on the number of exchanges a shareholder may make, but each Fund reserves
the right to limit excessive exchanges by any shareholder. See "Additional
Purchase and Redemption Information" in the SAI.

Exchanges may only be made between accounts registered in the same name. A
completed account application must be submitted to open a new account in a Fund
through an exchange if the shareholder requests any shareholder privilege not
associated with the existing account. Shareholders may only exchange into a Fund
if that Fund's shares may legally be sold in the shareholder's state of
residence.

The Trust (and Federal tax law) treats an exchange as a redemption of the shares
owned and the purchase of the shares of the fund being acquired. Accordingly, a
shareholder may realize a capital gain or loss with respect to the shares
redeemed. Redemptions and purchases are effected at the respective net asset
values of the two Funds as next determined following receipt of proper
instructions and all necessary supporting documents by the Fund whose shares are
being exchanged. The exchange privilege may be modified materially or terminated
by the Trust at any time upon 60 days' notice to shareholders.

17
<PAGE>

shareholder's social security or taxpayer identification number.

6. DISTRIBUTIONS AND TAX MATTERS

DISTRIBUTIONS

TAXES

Distributions paid by each Fund out of its net investment income (including
realized net short-term capital gain) are taxable to the shareholders of the
Fund as ordinary income. Distributions of net capital gain (i.e., the excess of
net capital gain from capital assets held more than one year over losses from
capital assets held for no more than one year) will be treated in the hands of
the shareholders as long-term capital gain.

DAILY ASSETS MUNICIPAL FUND. Distributions paid by Daily Assets Municipal Fund
out of federally tax-exempt interest income earned by the Fund ("exempt-interest
dividends") generally will not be subject to federal income tax in the hands of
the Fund's shareholders. Substantially all of the distributions paid by the Fund
are anticipated to be exempt-interest dividends. Persons who are "substantial
users" or "related persons" thereof of facilities financed by private activity
securities held by the Fund, however, may be subject to federal income tax on
their pro rata share of the interest income from those securities and should
consult their tax advisers before purchasing shares. Exempt-interest dividends
are included in the "adjusted current earnings" of corporations for purposes of
the federal alternative minimum tax ("AMT").

18
<PAGE>

STATE AND LOCAL TAXES. Daily Assets Government Fund's investment policies are
structured to provide shareholders, to the extent permissible by Federal and
state law, with income that is exempt or excluded from income taxation at the
state and local level. Many states (by statute, judicial decision or
administrative action) do not tax dividends from a regulated investment company
that are attributable to interest on obligations of the U.S. Treasury and
certain U.S. Government agencies and instrumentalities if the interest on those
obligations would not be taxable to a shareholder that held the obligation
directly. As a result, substantially all distributions paid by the Fund to
shareholders residing in certain states will be exempt or excluded from state
income taxes. A portion of the distributions paid by the other Funds to
shareholders may be exempt or excluded from state income taxes, but these Funds
are not managed to provide any specific amount of state tax-free income to
shareholders.

19
<PAGE>

Prospective investors are urged to consult their tax advisers.

7. OTHER INFORMATION

PERFORMANCE INFORMATION

Institutional Service Shares' performance may be advertised. All performance
information is based on historical results, is not intended to indicate future
performance and, unless otherwise indicated, is net of all expenses. The Funds
may advertise yield, which shows the rate of income a Fund has earned on its
investments as a percentage of the Fund's share price. To calculate yield, a
Fund takes the interest income it earned from its portfolio of investments for a
specified period (net of expenses), divides it by the average number of shares
entitled to receive distributions, and expresses the result as an annualized
percentage rate based on the Fund's share price at the end of the period. A
Fund's compounded annualized yield assumes the reinvestment of distributions
paid by the Fund, and, therefore will be somewhat higher than the annualized
yield for the same period. A Fund may also quote tax-equivalent yields, which
show the taxable yields a shareholder would have to earn to equal the Fund's
tax-free yield, after taxes. A tax-equivalent yield is calculated by dividing
the Fund's tax-free yield by one minus a stated federal, state or combined
federal and state tax rate. Each class' performance will vary.

BANKING LAW MATTERS

Banking laws and regulations generally permit a bank or bank affiliate to
purchase shares of an investment company as agent for and upon the order of a
customer and permit a bank or bank affiliate to serve as a financial institution
or perform sub-transfer agent or similar services for the Trust and its
shareholders. If a bank or bank affiliate were prohibited from performing all or
a part of the foregoing services, its shareholder customers would be permitted
to remain shareholders of the Trust and alternative means for continuing to
service them would be sought.

DETERMINATION OF NET ASSET VALUE

THE TRUST AND ITS SHARES

20
<PAGE>

each series. There are currently twenty-two series of the Trust.

Each share of each fund of the Trust and each class of shares has equal
distribution, liquidation and voting rights, and fractional shares have those
rights proportionately, except that expenses related to the distribution of the
shares of each class (and certain other expenses such as transfer agency and
administration expenses) are borne solely by those shares and each class votes
separately with respect to the provisions of any Rule 12b-1 plan which pertain
to the class and other matters for which separate class voting is appropriate
under applicable law. Generally, shares will be voted in the aggregate without
reference to a particular fund or class, except if the matter affects only one
fund or class or voting by fund or class is required by law, in which case
shares will be voted separately by fund or class, as appropriate. Delaware law
does not require the Trust to hold annual meetings of shareholders, and it is
anticipated that shareholder meetings will be held only when specifically
required by Federal or state law. Shareholders (and Trustees) have available
certain procedures for the removal of Trustees. There are no conversion or
preemptive rights in connection with shares of the Trust. All shares when issued
in accordance with the terms of the offering will be fully paid and
nonassessable. Shares are redeemable at net asset value, at the option of the
shareholders. A shareholder in a fund is entitled to the shareholder's pro rata
share of all distributions arising from that fund's assets and, upon redeeming
shares, will receive the portion of the fund's net assets represented by the
redeemed shares.

As of December 1, 1998, Bank of New Hampshire may be deemed to have controlled
Daily Assets Treasury Obligations Fund and Daily Assets Municipal Fund, H.M.
Payson & Co. may be deemed to have controlled Daily Assets Government Fund,
Peoples Heritage Bank may be deemed to have controlled Daily Assets Treasury
Obligations Fund, Daily Assets Government Obligations Fund and Daily Assets Cash
Fund, and National City Bank of Evansville may be deemed to have controlled
Daily Assets Cash Fund through investment in the Funds by their customers. From
time to time, these shareholders or other shareholders may own a large
percentage of shares of a Fund and accordingly, may be able to greatly affect
(if not determine) the outcome of a shareholder vote.

FUND STRUCTURE

OTHER CLASSES OF SHARES. In addition to Institutional Service Shares, each Fund
may create and issue shares of other classes of securities. Each Fund currently
has two other classes of shares authorized, Institutional Shares and Investor
Shares. Institutional Shares have an investment minimum of $1,000,000. Investor
Shares are offered to the general public, have a $10,000 minimum investment and
bear shareholder service and distribution fees. Institutional Shares incur less
expenses and Investor Shares incur more expenses than Institutional Service
Shares. See "Additional Information" below. Except for certain differences, each
share of each class represents an undivided, proportionate interest in a Fund.
Each share of each Fund is entitled to participate equally in distributions and
the proceeds of any liquidation of that Fund except that, due to the differing
expenses borne by the various classes, the amount of distributions will differ
among the classes.

21
<PAGE>

entitled to share pro rata in the net assets of the Portfolio available for
distribution to investors.

ADDITIONAL INFORMATION. Each class of a Fund (and any other investment company
that invests in a Portfolio) may have a different expense ratio and different
sales charges, including distribution fees, and each class' (and investment
company's) performance will be affected by its expenses and sales charges. For
more information on any other class of shares of the Funds or concerning any
other investment companies that invest in a Portfolio, investors may contact FFS
at 207-879-1900. If an investor invests through a financial institution, the
investor may also contact the investor's financial institution to obtain
information about the other classes or any other investment company investing in
a Portfolio.

22
<PAGE>

[Forum Funds - Institutional Shares Account Application]

23
<PAGE>

[Picture graphics on right half of back
cover of glob w/map as background.]

[Logo]

SHAREHOLDER INFORMATION:
Forum Shareholder Services, LLC
P.O. Box 446
Portland, ME 04112
207-879-0001 (IN PORTLAND, ME)
800-94FORUM (ELSEWHERE)

<PAGE>

FORUM FUNDS

DAILY ASSETS TREASURY OBLIGATIONS FUND
DAILY ASSETS GOVERNMENT FUND
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
DAILY ASSETS CASH FUND
DAILY ASSETS MUNICIPAL FUND

Account Information and
Shareholder Servicing: Distributor:
Forum Shareholder Services, LLC Forum Fund Services, LLC
P.O. Box 446 Two Portland Square
Portland, Maine 04112 Portland, Maine 04101
(207) 879-0001 (207) 879-1900
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
January 1, 1999

This Statement of Additional Information supplements the Prospectuses dated
January 1, 1999, offering Investor Shares, Institutional Service Shares and
Institutional Shares of Daily Assets Treasury Obligations Fund, Daily Assets
Government Fund, Daily Assets Government Obligations Fund, Daily Assets Cash
Fund and Daily Assets Municipal Fund, five portfolios of the Trust, and should
be read only in conjunction with the applicable Prospectus, a copy of which may
be obtained by an investor without charge by contacting the Trust's Distributor
at the address listed above.

TABLE OF CONTENTS
Page

1. General 2
2. Investment Policies 3
3. Investment Limitations 10
4. Investments by Financial Institutions 13
5. Performance Data 14
6. Management 16
7. Determination of Net Asset Value 24
8. Portfolio Transactions 25
9. Additional Purchase and Redemption Information 26
10. Taxation 28
11. Other Information 28
12. Financial Statements 31
Appendix A - Description of Securities Ratings A-1
Appendix B - Performance Information B-1
Appendix C - Miscellaneous Tables C-1
Appendix D - Additional Advertising Materials D-1

THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS AUTHORIZED
FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE PROSPECTUS.

<PAGE>

1. GENERAL

THE TRUST

The Trust is registered with the SEC as an open-end, management, investment
company and was organized as a business trust under the laws of the State of
Delaware on August 29, 1995. On January 5, 1996 the Trust succeeded to the
assets and liabilities of Forum Funds, Inc. Forum Funds, Inc. was incorporated
on March 24, 1980 and assumed the name of Forum Funds, Inc. on March 16, 1987.
The Board has the authority to issue an unlimited number of shares of beneficial
interest of separate series with no par value per share and to create separate
classes of shares within each series. The Trust currently offers shares of 22
series. The series of the Trust are as follows:

Daily Assets Treasury Obligations Fund Payson Value Fund
Daily Assets Government Fund Payson Balanced Fund.
Daily Assets Government Obligations Fund Polaris Global Value Fund
Daily Assets Cash Fund Austin Global Equity Fund
Daily Assets Municipal Fund Oak Hall Equity Fund
Quadra Growth Fund
Investors Bond Fund
TaxSaver Bond Fund
Investors High Grade Bond Fund
Maine Municipal Bond Fund
New Hampshire Bond Fund

Investors Index Fund
Investors Equity Fund
Investors Growth Fund
Small Company Opportunities Fund
International Equity Fund
Emerging Markets Fund

DEFINITIONS

As used in this Statement of Additional Information, the following terms shall
have the meanings listed:

"FIA" means Forum Investment Advisors, LLC.

"Board" means the Board of Trustees of the Trust.

"Core Trust" means Core Trust (Delaware).

"Core Trust Board" means the Board of Trustees of Core Trust.

"FAdS" means Forum Administrative Services, LLC.

"FSS" means Forum Shareholder Services, LLC

"FFS" means Forum Fund Services, LLC

"FFSI" means Forum Financial Services, Inc.

"FAcS" means Forum Accounting Services, LLC.

"Fund" means Daily Assets Treasury Obligations Fund, Daily Assets Government
Fund, Daily Assets Government Obligations Fund, Daily Assets Cash Fund or Daily
Assets Municipal Fund.

"Fund Business Day" has the meaning ascribed thereto in the current Prospectus
of the Funds.

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"NRSRO" means a nationally recognized statistical rating organization.

"Portfolio" means Treasury Cash Portfolio, Government Portfolio, Government Cash
Portfolio, Cash Portfolio or Municipal Cash Portfolio, each a portfolio of Core
Trust.

"SAI" means this Statement of Additional Information.

"SEC" means the U.S. Securities and Exchange Commission.

"Treasury Securities" has the meaning ascribed thereto by the current Prospectus
of the Funds.

"Trust" means Forum Funds.

"U.S. Government Securities" has the meaning ascribed thereto by the current
Prospectus of the Funds.

"1940 Act" means the Investment Company Act of 1940, as amended.

2. INVESTMENT POLICIES

Each Fund currently seeks to achieve its investment objective by investing all
of its investable assets in its corresponding Portfolio of Core Trust. The
corresponding Portfolios of each Fund are:

Fund Portfolio
---- ---------
Daily Assets Treasury Obligations Fund Treasury Cash Portfolio
Daily Assets Government Fund Government Portfolio
Daily Assets Government Obligations Fund Government Cash Portfolio
Daily Assets Cash Fund Cash Portfolio
Daily Assets Municipal Fund Municipal Cash Portfolio

Each Fund has a fundamental investment policy that allows it to invest all of
its investable assets in its corresponding Portfolio. The investment policies of
each Fund and its corresponding Portfolio are identical. Therefore, although
this and the following sections provide supplemental information regarding the
investment policies of the Portfolios (and the responsibilities of the Core
Trust Board), they apply equally to the investment policies of the Funds (and
the responsibilities of the Board).

Treasury Cash Portfolio, Government Cash Portfolio and Cash Portfolio currently
are prohibited from purchasing any security issued by the Federal Home Loan
Mortgage Corporation. This does not prohibit the Portfolios from entering into
repurchase agreements collateralized with securities issued by the Federal Home
Loan Mortgage Corporation.

RATINGS AS INVESTMENT CRITERIA

Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's, A Division of
The McGraw Hill Companies ("S&P") and other NRSROs are private services that
provide ratings of the credit quality of debt obligations. A description of the
higher quality ratings assigned to debt securities by several NRSROs is included
in Appendix A to this SAI. The Portfolios use these ratings in determining
whether to purchase, sell or hold a security. It should be emphasized, however,
that ratings are general and are not absolute standards of quality.
Consequently, securities with the same maturity, interest rate and rating may
have different market prices. Subsequent to its purchase by a Portfolio, an
issue of securities may cease to be rated or its rating may be reduced. FIA ,
and in certain cases the Core Trust Board, will consider such an event in
determining whether the Portfolio should continue to hold the obligation. Credit
ratings attempt to evaluate the safety of principal and interest payments and do
not evaluate the risks of fluctuations in market value. Also, rating agencies
may fail to make timely changes in credit ratings in

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response to developments and events, so that an issuer's current financial
condition may be better or worse than the rating indicates.

SMALL BUSINESS ADMINISTRATION SECURITIES

Each Portfolio may purchase securities issued by the Small Business
Administration ("SBA"). SBA securities are variable rate securities that carry
the full faith and credit of the United States Government, and generally have an
interest rate that resets monthly or quarterly based on a spread to the Prime
rate. SBA securities generally have maturities at issue of up to 25 years. No
Portfolio may purchase an SBA security if, immediately after the purchase, (i)
the Portfolio would have more than 15% of its net assets invested in SBA
securities, (ii) the total unamortized premium on SBA Securities with a premium
held by the Portfolio divided by the sum of the par amount of all SBA securities
with a premium held by the portfolio would exceed 0.25% of the Portfolios' net
assets or (iii) the total unamortized discount on SBA Securities with a discount
held by the Portfolio divided by the sum of the par amount of all SBA securities
with a discount held by the portfolio would exceed 0.25% of the Portfolios' net
assets. Premium is the amount above par for which a security is purchased and
discount is the amount below par for which a security is purchased.

MORTGAGE BACKED SECURITIES

The Portfolios may purchase adjustable rate mortgage backed or other asset
backed securities that are U.S. Government Securities. Treasury Cash Portfolio
may purchase mortgage backed or asset backed securities that are U.S. Treasury
Securities. These types of securities directly or indirectly represent a
participation in, or are secured by and payable from, adjustable rate mortgages
or other loans which may be secured by real estate or other assets. Unlike
traditional debt instruments, payments on these securities include both interest
and a partial payment of principal. Prepayments of the principal of underlying
loans may shorten the effective maturities of these securities. Some adjustable
rate securities (or the underlying loans) are subject to caps or floors that
limit the maximum change in interest rate during a specified period or over the
life of the security.

Adjustable rate mortgage backed securities ("MBSs") are securities that have
interest rates that are reset at periodic intervals, usually by reference to
some interest rate index or market interest rate. Government Cash Portfolio and
Cash Portfolio will only invest in adjustable rate MBSs that are U.S. Government
Securities. MBSs represent interests in pools of mortgages made by lenders such
as commercial banks, savings associations, mortgage bankers and mortgage brokers
and may be issued by governmental or government-related entities or by
non-governmental entities such as commercial banks, savings associations,
mortgage bankers and other secondary market issuers.

MBSs differ from other forms of debt securities, which normally provide for
periodic payment of interest in fixed amounts with principal payments at
maturity or specified call dates. In contrast, MBSs provide periodic payments
which consist of interest and, in most cases, principal. In effect, these
payments are a "pass-through" of the periodic payments and optional prepayments
made by the individual borrowers on their mortgage loans, net of any fees paid
to the issuer or guarantor of such securities. Additional payments to holders of
MBSs are caused by prepayments resulting from the sale of the underlying
property or the refinancing or foreclosure of the underlying mortgage loans.
Such prepayments may significantly shorten the effective maturities of MBSs, and
occur more often during periods of declining interest rates.

Although the rate adjustment feature of MBSs may act as a buffer to reduce sharp
changes in the value of MBSs, these securities are still subject to changes in
value based on changes in market interest rates or changes in the issuer's
creditworthiness. Because the interest rate is reset only periodically, changes
in the interest rate on MBSs may lag behind changes in prevailing market
interest rates. Also, some MBSs (or the underlying mortgages) are subject to
caps or floors that limit the maximum change in interest rate during a specified
period or over the life of the security.

During periods of declining interest rates, income to the Portfolios derived
from mortgages which are not prepaid will decrease as the coupon rate resets
along with the decline in interest rates in contrast to the income on fixed-rate
mortgages, which will remain constant. At times, some of the MBSs in which the
Portfolios will invest will have

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<PAGE>

higher-than-market interest rates, and will therefore be purchased at a premium
above their par value. Unscheduled prepayments, which are made at par, will
cause the Portfolios to suffer a loss equal to the unamortized premium, if any.

During periods of rising interest rates, changes in the coupon rates of the
mortgages underlying the Portfolios' investments may lag behind changes in
market interest rates. This may result in a slightly lower value until the
coupons reset to market rates. Many MBSs in the Portfolios' portfolios will have
"caps" that limit the maximum amount by which the interest rate paid by the
borrower may change at each reset date or over the life of the loan and
fluctuation in interest rates above these levels could cause these securities to
"cap out" and to behave more like fixed-rate debt securities.

The Portfolios may purchase collateralized mortgage obligations ("CMOs"), which
are collateralized by MBSs or by pools of conventional mortgages. See
"Investments By Financial Institutions - Investments by Shareholders that are
Credit Unions-Treasury Cash Portfolio and Government Cash Portfolio." CMOs are
typically structured with a number of classes or series that have different
maturities and are generally retired in sequence. Each class of bonds receives
periodic interest payments according to the coupon rate on the bonds. However,
all monthly principal payments and any prepayments from the collateral pool are
paid first to the "Class 1" bondholders. The principal payments are such that
the Class 1 bonds will be completely repaid no later than, for example, five
years after the offering date. Thereafter, all payments of principal are
allocated to the next most senior class of bonds until that class of bonds has
been fully repaid. Although full payoff of each class of bonds is contractually
required by a certain date, any or all classes of bonds may be paid off sooner
than expected because of an acceleration in pre-payments of the obligations
comprising the collateral pool.

Since the inception of the mortgage-related pass-through security in 1970, the
market for these securities has expanded considerably. The size of the primary
issuance market and active participation in the secondary market by securities
dealers and many types of investors make government and government-related
pass-through pools highly liquid.

Governmental or private entities may create new types of MBSs in response to
changes in the market or changes in government regulation of such securities. As
new types of these securities are developed and offered to investors, the FIA
may, consistent with the investment objective and policies of a Portfolio,
consider making investments in such new types of securities.

WHEN-ISSUED SECURITIES AND DELAYED DELIVERY SECURITIES

Each Portfolio may purchase securities on a when-issued or delayed delivery
basis. In those cases, the purchase price and the interest rate payable on the
securities are fixed on the transaction date and delivery and payment may take
place a month or more after the date of the transaction. At the time a Portfolio
makes the commitment to purchase securities on a when-issued or delayed delivery
basis, the Portfolio will record the transactions as a purchase and thereafter
reflect the value each day of such securities in determining its net asset
value. If a Portfolio chooses to dispose of the right to acquire a when-issued
security prior to its acquisition, it could, as with the disposition of any
other portfolio obligation, incur a gain or loss due to market fluctuation.
Failure of an issuer to deliver the security may result in the Portfolio
incurring a loss or missing an opportunity to make an alternative investment.
When a Portfolio agrees to purchase a security on a when-issued or delayed
delivery basis, its custodian will set aside and maintain in a segregated
account cash, U.S. Government Securities or other liquid securities with a
market value at all times at least equal to the amount of its commitment.

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ILLIQUID SECURITIES

Each Portfolio may invest up to 10% of its net assets in illiquid securities.
The term "illiquid securities" for this purpose means repurchase agreements not
entitling the holder to payment of principal within seven days and securities
that are illiquid by virtue of legal or contractual restrictions on resale or
the absence of a readily available market.

The Core Trust Board has ultimate responsibility for determining whether
specific securities are liquid or illiquid. The Core Trust Board has delegated
the function of making day-to-day determinations of liquidity to FIA and, with
respect to certain types of restricted securities which may be deemed to be
liquid, has adopted guidelines to be followed by the FIA. FIA takes into account
a number of factors in reaching liquidity decisions, including but not limited
to (1) the frequency of trades and quotations for the security; (2) the number
of dealers willing to purchase or sell the security and the number of other
potential buyers; (3) the willingness of dealers to undertake to make a market
in the security; (4) the nature of the marketplace trades, including the time
needed to dispose of the security, the method of soliciting offers and the
mechanics of the transfer; (5) whether the security is registered; and (6) if
the security is not traded in the United States, whether it can be freely traded
in a liquid foreign securities market. FIA monitors the liquidity of the
securities in each Portfolio's portfolio and report periodically to the Core
Trust Board.

Certificates of deposit and other fixed time deposits that carry an early
withdrawal penalty or mature in greater than seven days are treated by Portfolio
as illiquid securities if there is no readily available market for the
instrument.

REPURCHASE AGREEMENTS AND SECURITIES LENDING

In order to obtain additional income, the Portfolios may from time to time lend
securities from their portfolio to brokers, dealers and financial institutions.
Securities loans must be callable at any time and must be continuously secured
by collateral from the borrower in the form of cash or U.S. Government
Securities. The Portfolios receive fees in respect of securities loans from the
borrower or interest from investing the cash collateral. The Portfolios may pay
fees to arrange the loans. The Portfolios may not lend portfolio securities in
an amount greater than 33 1/3% of the value of their total assets.

In connection with entering into repurchase agreements and securities loans, the
Portfolios require continual maintenance by Core Trust's custodian of the market
value of the underlying collateral in amounts equal to, or in excess of, the
repurchase price plus the transaction costs (including loss of interest) that
the Portfolios could expect to incur upon liquidation of the collateral if the
counterparty defaults. A Portfolio might suffer a loss to the extent that the
proceeds from the sale of the collateral are less than the repurchase price. In
the event of a counterparty's bankruptcy, a Portfolios might suffer a loss due
to a delay in or prevention from selling the collateral for the Portfolio's
benefit. Failure by the other party to deliver a security purchased by a
Portfolio may result in a missed opportunity to make an alternative investment.
FIA monitors the creditworthiness of counterparties to these transactions under
the Core Trust Board's general supervision and pursuant to specific Core Trust
Board adopted procedures.

VARIABLE AND FLOATING RATE SECURITIES

The yield of variable and floating rate securities varies in relation to changes
in specific money market rates, such as the Prime Rate. A "variable" interest
rate adjusts at predetermined intervals (for example, daily, weekly or monthly),
while a "floating" interest rate adjusts whenever a specified benchmark rate
(such as the bank prime lending rate) changes. These changes are reflected in
adjustments to the yields of the variable and floating rate securities, and
different securities may have different adjustment rates. Accordingly, as
interest rates increase or decrease, the capital appreciation or depreciation
may be less on these obligations than for fixed rate obligations. To the extent
that the Portfolios invest in long-term variable or floating rate securities,
FIA believes that the Portfolios may be able to take advantage of the higher
yield that is usually paid on long-term securities.

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Cash Portfolio also may purchase variable and floating rate master notes of
corporations, which are unsecured obligations redeemable upon notice that permit
investment of fluctuating amounts at varying rates of interest pursuant to
direct arrangement with the issuer of the instrument. These obligations include
master demand notes that permit investment of fluctuating amounts at varying
rates of interest pursuant to direct arrangement with the issuer of the
instrument. The issuer of these obligations often has the right, after a given
period, to prepay their outstanding principal amount of the obligations upon a
specified number of days' notice. These obligations generally are not traded,
nor generally is there an established secondary market for these obligations. To
the extent a demand note does not have a seven day or shorter demand feature and
there is no readily available market for the obligation, it is treated as an
illiquid security.

No Portfolio may purchase a variable or floating rate security whose interest
rate is adjusted based on long-term interest rate or index, on two interest
rates or indexes, on am interest rate or index that materially lags short-term
market rates. All variable and floating rate securities purchased by the
Portfolios have an interest rate that is adjusted based on a single short-term
rate or index, such as the Prime Rate.

INVESTMENT COMPANY SECURITIES

In connection with managing their cash position, the Portfolios may invest in
the securities of other investment companies that are money market funds within
the limits proscribed by the 1940 Act. Under normal circumstances, each
Portfolio may invest up to 15% of its assets in money market funds. The
Portfolio only invests in money market funds when it has excess cash and FIA
believes that the investment is in the best interest of the Portfolio. In
addition to a Portfolio's expenses (including the various fees), as a
shareholder in another investment company, the Portfolio bears its pro rata
portion of the other investment company's expenses (including fees). Those
expenses are not part of a Portfolio's (or Fund's) expense ratio, but rather are
reflected in the yield of the investment in the money market fund.

ZERO-COUPON SECURITIES

A Portfolio may invest in zero-coupon securities such as Treasury bills and
separately traded principal and interest components of Treasury Securities
issued or guaranteed under the U.S. Treasury's Separate Trading of Registered
Interest and Principal of Securities ("STRIPS") program. These securities are
sold at original issue discount and pay no interest to holders prior to
maturity. Because of this, zero-coupon securities may be subject to greater
fluctuation of market value than the other securities in which the Portfolios
may invest. All zero-coupon securities in which the Portfolio invests will have
a maturity of less than 13 months.

A Portfolio (and thus a Fund) must include a portion of the original issue
discount of zero-coupon securities, if any, as income even though these
securities do not pay any interest until maturity. Because a Fund distributes
all of its net investment income, the Fund may have to sell portfolio securities
to distribute imputed income, which may occur at a time when FIA would not have
chosen to sell such securities and which may result in a taxable gain or loss.

MUNICIPAL SECURITIES

Municipal securities are issued by the states, territories and possessions of
the United States, their political subdivisions (such as cities, counties and
towns) and various authorities (such as public housing or redevelopment
authorities), instrumentalities, public corporations and special districts (such
as water, sewer or sanitary districts) of the states, territories and
possessions of the United States or their political subdivisions. In addition,
municipal securities include securities issued by or on behalf of public
authorities to finance various privately operated facilities, such as industrial
development bonds or other private activity bonds that are backed only by the
assets and revenues of the non-governmental user (such as manufacturing
enterprises, hospitals, colleges or other entities).

Municipal securities historically have not been subject to registration with the
SEC, although there have been proposals which would require registration in the
future.

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MUNICIPAL NOTES. Municipal notes, which may be either "general obligation" or
"revenue" securities are intended to fulfill the short-term capital needs of the
issuer and generally have maturities not exceeding one year. They include the
following: tax anticipation notes, revenue anticipation notes, bond anticipation
notes, construction loan notes and tax-exempt commercial paper. Tax anticipation
notes are issued to finance working capital needs of municipalities, and are
payable from various anticipated future seasonal tax revenues, such as income,
sales, use and business taxes. Revenue anticipation notes are issued in
expectation of receipt of other types of revenues, such as federal revenues
available under various federal revenue sharing programs. Bond anticipation
notes are issued to provide interim financing until long-term financing can be
arranged and are typically payable from proceeds of the long-term bonds.
Construction loan notes are sold to provide construction financing. After
successful completion and acceptance, many such projects receive permanent
financing through the Federal Housing Administration under the Federal National
Mortgage Association or the Government National Mortgage Association. Tax-exempt
commercial paper is a short-term obligation with a stated maturity of 365 days
or less. It is issued by agencies of state and local governments to finance
seasonal working capital needs or as short-term financing in anticipation of
longer term financing. Municipal notes also include longer term issues that are
remarketed to investors periodically, usually at one year intervals or less.

MUNICIPAL BONDS. Municipal bonds meet longer term capital needs of a municipal
issuer and generally have maturities of more than one year when issued. General
obligation bonds are used to fund a wide range of public projects, including
construction or improvement of schools, highways and roads, and water and sewer
systems. General obligation bonds are secured by the issuer's pledge of its full
faith and credit and taxing power for the payment of principal and interest. The
taxes that can be levied for the payment of debt service may be limited or
unlimited as to rate or amount. Revenue bonds in recent years have come to
include an increasingly wide variety of types of municipal obligations. As with
other kinds of municipal obligations, the issuers of revenue bonds may consist
of virtually any form of state or local governmental entity. Generally, revenue
bonds are secured by the revenues or net revenues derived from a particular
facility, class of facilities, or, in some cases, from the proceeds of a special
excise or other specific revenue source, but not from general tax revenues.
Revenue bonds are issued to finance a wide variety of capital projects including
electric, gas, water and sewer systems; highways, bridges, and tunnels; port and
airport facilities; colleges and universities; and hospitals. Many of these
bonds are additionally secured by a debt service reserve fund which can be used
to make a limited number of principal and interest payments should the pledged
revenues be insufficient. Various forms of credit enhancement, such as a bank
letter of credit or municipal bond insurance, may also be employed in revenue
bond issues. Revenue bonds issued by housing authorities may be secured in a
number of ways, including partially or fully insured mortgages, rent subsidized
and/or collateralized mortgages, and/or the net revenues from housing or other
public projects. Some authorities provide further security in the form of a
state's ability (without obligation) to make up deficiencies in the debt service
reserve fund. In recent years, revenue bonds have been issued in large volumes
for projects that are privately owned and operated, as discussed below.

Municipal bonds are considered private activity bonds if they are issued to
raise money for privately owned or operated facilities used for such purposes as
production or manufacturing, housing, health care and other nonprofit or
charitable purposes. These bonds are also used to finance public facilities such
as airports, mass transit systems and ports. The payment of the principal and
interest on such bonds is dependent solely on the ability of the facility's
owner or user to meet its financial obligations and the pledge, if any, of real
and personal property as security for such payment.

While at one time the pertinent provisions of the Code permitted private
activity bonds to bear tax-exempt interest in connection with virtually any type
of commercial or industrial project (subject to various restrictions as to
authorized costs, size limitations, state per capita volume restrictions, and
other matters), the types of qualifying projects under the Code have become
increasingly limited, particularly since the enactment of the Tax Reform Act of
1986. Under current provisions of the Code, tax-exempt financing remains
available, under prescribed conditions, for certain privately owned and operated
facilities of organizations described in Section 501(c)(3) of the Code,
multi-family rental housing facilities, airports, docks and wharves, mass
commuting facilities and solid waste disposal projects, among others, and for
the tax-exempt refinancing of various kinds of other private commercial projects
originally financed with tax-exempt bonds. In future years, the types of
projects qualifying under the Code for tax-exempt financing could become
increasingly limited.

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OTHER MUNICIPAL OBLIGATIONS. Other municipal obligations, incurred for a variety
of financing purposes, include municipal leases, which may take the form of a
lease or an installment purchase or conditional sale contract. Municipal leases
are entered into by state and local governments and authorities to acquire a
wide variety of equipment and facilities such as fire and sanitation vehicles,
telecommunications equipment and other capital assets. Municipal leases
frequently have special risks not normally associated with general obligation or
revenue bonds. Leases and installment purchase or conditional sale contracts
(which normally provide for title to the leased asset to pass eventually to the
government issuer) have evolved as a means for governmental issuers to acquire
property and equipment without being required to meet the constitutional and
statutory requirements for the issuance of debt. The debt-issuance limitations
of many state constitutions and statutes are deemed to be inapplicable because
of the inclusion in many leases or contracts of "non-appropriation" clauses that
provide that the governmental issuer has no obligation to make future payments
under the lease or contract unless money is appropriated for such purpose by the
appropriate legislative body on a yearly or other periodic basis.

ALTERNATIVE MINIMUM TAX. Municipal securities are also categorized according to
(i) whether the interest is or is not includable in the calculation of
alternative minimum taxes imposed on individuals and corporations, (ii) whether
the costs of acquiring or carrying the bonds are or are not deductible in part
by banks and other financial institutions, and (iii) other criteria relevant for
Federal income tax purposes. Due to the increasing complexity of the Code and
related requirements governing the issuance of tax-exempt bonds, industry
practice has uniformly required as a condition to the issuance of such bonds,
but particularly for revenue bonds, an opinion of nationally recognized bond
counsel as to the tax-exempt status of interest on the bonds.

PUTS AND STANDBY COMMITMENTS ON MUNICIPAL SECURITIES. Municipal Cash Portfolio
may acquire "puts" with respect to municipal securities. A put gives a Portfolio
the right to sell the municipal security at a specified price at any time on or
before a specified date. A Portfolio may sell, transfer or assign a put only in
conjunction with its sale, transfer or assignment of the underlying security or
securities. The amount payable to a Portfolio upon its exercise of a "put" is
normally: (1) the Portfolio's acquisition cost of the municipal securities
(excluding any accrued interest which the Portfolio paid on their acquisition),
less any amortized market premium or plus any amortized market or original issue
discount during the period the Portfolio owned the securities, plus (2) all
interest accrued on the securities since the last interest payment date during
that period.

Puts may be acquired by the Portfolio to facilitate the liquidity of its
portfolio assets. Puts may also be used to facilitate the reinvestment of a
Portfolio's assets at a rate of return more favorable than that of the
underlying security. Municipal Cash Portfolio expects that it will generally
acquire puts only where the puts are available without the payment of any direct
or indirect consideration. However, if necessary or advisable, the Portfolio may
pay for a put either separately in cash or by paying a higher price for
portfolio securities which are acquired subject to the puts (thus reducing the
yield to maturity otherwise available for the same securities). The Portfolio
intends to enter into puts only with dealers, banks and broker-dealers which, in
the Portfolio's Investment Adviser's opinion, present minimal credit risks.

Puts may, under certain circumstances, also be used to shorten the maturity of
underlying variable rate or floating rate securities for purposes of calculating
the remaining maturity of those securities and the dollar-weighted average
portfolio maturity of a Portfolio's assets.

The Portfolio may purchase municipal securities together with the right to
resell them to the seller or a third party at an agreed-upon price or yield
within specified periods prior to their maturity dates. Such a right to resell
is commonly known as a "stand-by commitment," and the aggregate price which the
Portfolio pays for securities with a stand-by commitment may be higher than the
price which otherwise would be paid. The primary purpose of this practice is to
permit a Portfolio to be as fully invested as practicable in municipal
securities while preserving the necessary flexibility and liquidity to meet
unanticipated redemptions. In this regard, a Portfolio acquires stand-by
commitments solely to facilitate portfolio liquidity and does not exercise its
rights thereunder for trading purposes. Stand-by commitments involve certain
expenses and risks, including the inability of the issuer of the commitment to
pay for the securities at the time the commitment is exercised,
non-marketability of the commitment, and differences between the maturity of the
underlying security and the maturity of the commitment. The Portfolio's

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policy is to enter into stand-by commitment transactions only with municipal
securities dealers which are determined to present minimal credit risks.

The acquisition of a stand-by commitment does not affect the valuation or
maturity of the underlying municipal securities which continue to be valued in
accordance with the amortized cost method. Stand-by commitments acquired by the
Portfolio are valued at zero in determining net asset value. When a Portfolio
pays directly or indirectly for a stand-by commitment, its cost is reflected as
unrealized depreciation for the period during which the commitment is held.
Stand-by commitments do not affect the average weighted maturity of the
Portfolio's portfolio of securities.

3. INVESTMENT LIMITATIONS

Fundamental investment limitations of a Fund or of a Portfolio cannot be changed
without the affirmative vote of the lesser of (i) more than 50% of the
outstanding interests of the respective Fund or Portfolio or (ii) 67% of the
shares of the Fund or Portfolio present or represented at a shareholders or
interestholders meeting at which the holders of more than 50% of the outstanding
interests of the Fund or Portfolio are present or represented.

Except as required by the 1940 Act, if a percentage restriction on investment or
utilization of assets is adhered to at the time an investment is made, a later
change in percentage resulting from a change in the market values of a
Portfolio's assets, the change in status of a security or purchases and
redemptions of shares will not be considered a violation of the limitation.

Each Fund has adopted the same fundamental and nonfundamental investment
limitations as its corresponding Portfolio. In addition, the Portfolios and the
Funds have adopted a fundamental policy which provides that, notwithstanding any
other investment policy or restriction (whether fundamental), the Portfolio or
Fund, as applicable, may invest all of its assets in the securities of a single
pooled investment fund having substantially the same investment objectives,
policies and restrictions as the Fund or Portfolio, as applicable.

GOVERNMENT PORTFOLIO

Government Portfolio has adopted the following fundamental investment
limitations which are in addition to those contained in the Prospectus of Daily
Assets Government Fund. The Portfolio may not:

(1) DIVERSIFICATION. With respect to 75% of its assets, purchase securities,
other than U.S. Government Securities, of any one issuer if more than 5% of
the value of the Portfolio's total assets would at the time of purchase be
invested in any one issuer.

(2) CONCENTRATION. Purchase securities, other than U.S. Government Securities,
if more than 25% of the value of the Portfolio's total assets would be
invested in securities of issuers conducting their principal business
activity in the same industry, provided that consumer finance companies and
industrial finance companies are considered to be separate industries and
that there is no limit on the purchase of the securities of domestic
commercial banks.

(3) UNDERWRITING. Act as an underwriter of securities of other issuers, except
to the extent that, in connection with the disposition of portfolio
securities, the Portfolio may be deemed to be an underwriter for purposes
of the Securities Act of 1933.

(4) REAL ESTATE. Purchase or sell real estate or any interest therein
(including limited partnership interests), except that the Portfolio may
invest in debt obligations secured by real estate or interests therein or
issued by companies that invest in real estate or interests therein.

(5) COMMODITIES. Purchase or sell physical commodities or contracts relating to
physical commodities, provided that currencies and currency-related
contracts will not be deemed to be physical commodities.

10
<PAGE>

(6) BORROWING. Borrow money, except for temporary or emergency purposes
(including the meeting of redemption requests). Total borrowings may not
exceed 33 1/3% of the Portfolio's total assets and borrowing for purposes
other than meeting redemptions may not exceed 5% of the value of the
Portfolio's total assets. Outstanding borrowings in excess of 5% of the
value of the Portfolio's total assets must be repaid before any subsequent
investments are made by the Portfolio.

(7) SENIOR SECURITIES. Issue senior securities except pursuant to Section 18 of
the 1940 Act and except that the Portfolio may borrow money subject to
investment limitations specified in the Portfolio's Prospectus.

(8) LENDING. Make loans, except that the Portfolio may (i) purchase debt
securities which are otherwise permissible investments, (ii) enter into
repurchase agreements and (iii) lend portfolio securities, but not in an
amount greater than 33 1/3% of the value of the Portfolio's total assets.

(9) PLEDGING. Pledge, mortgage or hypothecate its assets, except to secure
permitted indebtedness. Collateralized loans of securities are not deemed
to be pledges or hypothecations for this purpose.

(10) OPTIONS. Write put and call options.

(11) INVESTING FOR CONTROL. Invest for the purpose of exercising control over
any person.

(12) RESTRICTED SECURITIES. Purchase restricted securities.

Government Portfolio has adopted the following nonfundamental investment
limitations that may be changed by the Core Trust Board without shareholder
approval. The Portfolio may not:

(a) DIVERSIFICATION. With respect to 100% of its assets, purchase a
security other than a U.S. Government Security if, as a result, more
than 5% of the Portfolio's total assets would be invested in the
securities of a single issuer, unless the investment is permitted by
Rule 2a-7 under the 1940 Act.

(b) SECURITIES WITH VOTING RIGHTS. Purchase securities having voting
rights, except the Portfolio may invest in securities of other
investment companies to the extent permitted by the 1940 Act.

(c) MARGIN; SHORT SALES. Purchase securities on margin, or make short sales
of securities, except for the use of short-term credit necessary for
the clearance of purchases and sales of portfolio securities.

(d) LIQUIDITY. Acquire securities or invest in repurchase agreements with
respect to any securities if, as a result, more than 10% of the
Portfolio's net assets (taken at current value) would be invested in
repurchase agreements not entitling the holder to payment of principal
within seven days and in securities that are illiquid by virtue of
legal or contractual restrictions on resale or the absence of a readily
available market.

For purposes of limitation (2): (i) loan participations are considered to be
issued by both the issuing bank and the underlying corporate borrower; (ii)
utility companies are divided according to their services (for example, gas, gas
transmission, electric and telephone will each be considered a separate
industry); and (iii) financial service companies will be classified according to
the end users of their services, for example, automobile finance, bank finance
and diversified finance will each be considered a separate industry.

TREASURY CASH PORTFOLIO, GOVERNMENT CASH PORTFOLIO, CASH PORTFOLIO
AND MUNICIPAL CASH PORTFOLIO

Treasury Cash Portfolio, Government Cash Portfolio, Cash Portfolio and Municipal
Cash Portfolio have adopted the following fundamental investment limitations
which are in addition to those contained in the Prospectuses offering Daily
Assets Treasury Obligations Fund, Daily Assets Government Obligations Fund,
Daily Assets Cash Fund and Daily Assets Municipal Fund. No Portfolio may:

11
<PAGE>

(1) DIVERSIFICATION. With respect to 75% of its assets, purchase a security
other than a U.S. Government Security if, as a result, more than 5% of the
Portfolio's total assets would be invested in the securities of a single
issuer.

(2) CONCENTRATION. Purchase securities if, immediately after the purchase, more
than 25% of the value of the Portfolio's total assets would be invested in
the securities of issuers having their principal business activities in the
same industry; provided, however, that there is no limit on investments in
U.S. Government Securities.

(3) UNDERWRITING. Underwrite securities of other issuers, except to the extent
that the Portfolio may be considered to be acting as an underwriter in
connection with the disposition of portfolio securities.

(4) REAL ESTATE. Purchase or sell real estate or any interest therein, except
that the Portfolio may invest in debt obligations secured by real estate or
interests therein or issued by companies that invest in real estate or
interests therein.

(6) BORROWING. Borrow money, except for temporary or emergency purposes
(including the meeting of redemption requests) and except for entering into
reverse repurchase agreements, provided that borrowings do not exceed 33
1/3% of the value of the Portfolio's total assets.

(7) SENIOR SECURITIES. Issue senior securities except as appropriate to
evidence indebtedness that the Portfolio is permitted to incur, and
provided that the Portfolio may issue shares of additional series or
classes that the Trustees may establish.

(8) LENDING. Make loans except for loans of portfolio securities, through the
use of repurchase agreements, and through the purchase of debt securities
that are otherwise permitted investments.

(9) THRIFT INVESTOR LIMITATIONS. With respect to Government Cash Portfolio,
purchase or hold any security that (i) a Federally chartered savings
association may not invest in, sell, redeem, hold or otherwise deal
pursuant to law or regulation, without limit as to percentage of the
association's assets and (ii) pursuant to 12 C.F.R. Section 566.1 would
cause shares of the Portfolio not to be deemed to be short term liquid
assets when owned by Federally chartered savings associations.

Treasury Cash Portfolio, Government Cash Portfolio, Cash Portfolio and Municipal
Cash Portfolio have adopted the following nonfundamental investment limitations
that may be changed by the Core Trust Board without shareholder approval. Each
Portfolio may not:

(b) BORROWING. Purchase securities for investment while any borrowing
equaling 5% or more of the Portfolio's total assets is outstanding; and
if at any time the Portfolio's borrowings exceed the Portfolio's
investment limitations due to a decline in net assets, such borrowings
will be promptly (within three days) reduced to the extent necessary to
comply with the limitations. Borrowing for purposes other than meeting
redemption requests will not exceed 5% of the value of the Portfolio's
total assets.

(c) SECURITIES WITH VOTING RIGHTS. Purchase securities that have voting
rights, except the Portfolio may invest in securities of other
investment companies to the extent permitted by the 1940 Act.

12
<PAGE>

(d) MARGIN; SHORT SALES. Purchase securities on margin, or make short sales
of securities, except for the use of short-term credit necessary for
the clearance of purchases and sales of portfolio securities.

(e) LIQUIDITY. Acquire securities or invest in repurchase agreements with
respect to any securities if, as a result, more than 10% of the
Portfolio's net assets (taken at current value) would be invested in
repurchase agreements not entitling the holder to payment of principal
within seven days and in securities that are illiquid by virtue of
legal or contractual restrictions on resale or the absence of a readily
available market.

4. INVESTMENTS BY FINANCIAL INSTITUTIONS

INVESTMENT BY SHAREHOLDERS THAT ARE BANKS - DAILY ASSETS GOVERNMENT OBLIGATIONS
FUND

Government Cash Portfolio invests only in instruments which, if held directly by
a bank or bank holding company organized under the laws of the United States or
any state thereof, would be assigned to a risk-weight category of no more than
20% under the current risk based capital guidelines adopted by the Federal bank
regulators (the "Guidelines"). In the event that the Guidelines are revised, the
Portfolio's portfolio will be modified accordingly, including by disposing of
portfolio securities or other instruments that no longer qualify under the
Guidelines. In addition, the Portfolio does not intend to hold in its portfolio
any securities or instruments that would be subject to restriction as to amount
held by a National bank under Title 12, Section 24 (Seventh) of the United
States Code. If the Portfolio's portfolio includes any instruments that would be
subject to a restriction as to amount held by a National bank, investment in the
Portfolio may be limited.

The Guidelines provide that shares of an investment fund are generally assigned
to the risk-weight category applicable to the highest risk-weighted security or
instrument that the fund is permitted to hold. Accordingly, Portfolio shares
should qualify for a 20% risk weighting under the Guidelines. The Guidelines
also provide that, in the case of an investment fund whose shares should qualify
for a risk weighting below 100% due to limitations on the assets which it is
permitted to hold, bank examiners may review the treatment of the shares to
ensure that they have been assigned an appropriate risk-weight. In this
connection, the Guidelines provide that, regardless of the composition of an
investment fund's assets, shares of a fund may be assigned to the 100%
risk-weight category if it is determined that the fund engages in activities
that appear to be speculative in nature or has any other characteristics that
are inconsistent with a lower risk weighting. FIA has no reason to believe that
such a determination would be made with respect to the Portfolio. There are
various subjective criteria for making this determination and, therefore, it is
not possible to provide any assurance as to how Portfolio shares will be
evaluated by bank examiners.

Before acquiring Fund shares, prospective investors that are banks or bank
holding companies, particularly those that are organized under the laws of any
country other than the United States or of any state, territory or other
political subdivision of the United States, and prospective investors that are
U.S. branches and agencies of foreign banks or Edge Corporations, should consult
all applicable laws, regulations and policies, as well as appropriate regulatory
bodies, to confirm that an investment in Fund shares is permissible and in
compliance with any applicable investment or other limits.

Fund shares held by National banks are generally required to be revalued
periodically and reported at the lower of cost or market value. Such shares may
also be subject to special regulatory reporting, accounting and tax treatment.
In addition, a bank may be required to obtain specific approval from its board
of directors before acquiring Fund shares, and thereafter may be required to
review its investment in a Fund for the purpose of verifying compliance with
applicable Federal banking laws, regulations and policies.

13
<PAGE>

National banks generally must review their holdings of shares of a Fund at least
quarterly to ensure compliance with established bank policies and legal
requirements. Upon request, the Portfolios will make available to the Funds
investors information relating to the size and composition of their portfolio
for the purpose of providing Fund shareholders with this information.

INVESTMENT BY SHAREHOLDERS THAT ARE CREDIT UNIONS - DAILY ASSETS TREASURY
OBLIGATIONS FUND AND DAILY ASSETS GOVERNMENT OBLIGATIONS FUND

Treasury Cash Portfolio and Government Cash Portfolio limit their investments to
investments that are legally permissible for Federally chartered credit unions
under applicable provisions of the Federal Credit Union Act (including 12 U.S.C.
Section 1757(7), (8) and (15)) and the applicable rules and regulations of the
National Credit Union Administration (including 12 C.F.R. Part 703, Investment
and Deposit Activities), as such statutes and rules and regulations may be
amended. The Portfolios limit their investments to U.S. Government Securities
(including Treasury STRIPS) and repurchase agreements fully collateralized by
U.S. Government Securities. Certain U.S. Government Securities owned by a
Portfolio may be mortgage or asset backed, but, no such security will be (i) a
stripped mortgage backed security ("SMBS"), (ii) a collateralized mortgage
obligation ("CMO") or real estate mortgage investment conduit ("REMIC") that
does not meet all of the tests outlined in 12 C.F.R. Section 703.100(e) or (iii)
a residual interest in a CMO or REMIC. The Portfolios also may invest in reverse
repurchase agreements in accordance with 12 C.F.R. 703.100(j) to the extent
otherwise permitted herein and in the Prospectus.

INVESTMENTS BY SHAREHOLDERS THAT ARE SAVINGS ASSOCIATIONS - DAILY ASSETS
GOVERNMENT OBLIGATIONS FUND

Government Cash Portfolio limit their investments to investments that are
legally permissible for Federally chartered savings associations without limit
as to percentage under applicable provisions of the Home Owners' Loan Act
(including 12 U.S.C. Section 1464) and the applicable rules and regulations of
the Office of Thrift Supervision, as such statutes and rules and regulations may
be amended. In addition, the Portfolio limit its investments to investments that
are permissible for an open-end investment company to hold and would permit
shares of the investment company to qualify as liquid assets under 12 C.F.R.
Section 566.1(g) and as short-term liquid assets under 12 C.F.R. Section
566.1(h). These policies may be amended only by approval of a Portfolio's
interestholders or Fund's shareholders, as applicable.

5. PERFORMANCE DATA

For a listing of certain performance data as of August 31, 1998, see Appendix B.

YIELD INFORMATION

Each Fund may provide current annualized and effective annualized yield
quotations for each class based on its daily dividends. These quotations may
from time to time be used in advertisements, shareholder reports or other
communications to shareholders. All performance information supplied by a Fund
is historical and is not intended to indicate future returns.

In performance advertising the Funds may compare any of their performance
information with data published by independent evaluators such as Morningstar,
Lipper Analytical Services, Inc., IBC Financial Data, Inc. or CDA/Wiesenberger
or other companies which track the investment performance of investment
companies ("Fund Tracking Companies"). The Funds may also compare any of their
performance information with the performance of recognized stock, bond and other
indices. The Funds may also refer in such materials to mutual fund performance
rankings and other data published by Fund Tracking Companies. Performance
advertising may also refer to discussions of a Fund and comparative mutual fund
data and ratings reported in independent periodicals, such as newspapers and
financial magazines.

Any current yield quotation of a class of a Fund which is used in such a manner
as to be subject to the provisions of Rule 482(d) under the Securities Act of
1933, as amended, shall consist of an annualized historical yield, carried at
least to the nearest hundredth of one percent, based on a specific
seven-calendar-day period and shall be calculated

14
<PAGE>

by dividing the net change during the seven-day period in the value of an
account having a balance of one share at the beginning of the period by the
value of the account at the beginning of the period, and multiplying the
quotient by 365/7. For this purpose, the net change in account value would
reflect the value of additional shares purchased with dividends declared on the
original share and dividends declared on both the original share and any such
additional shares, but would not reflect any realized gains or losses from the
sale of securities or any unrealized appreciation or depreciation on portfolio
securities. In addition, any effective annualized yield quotation used by a Fund
shall be calculated by compounding the current yield quotation for such period
by adding 1 to the product, raising the sum to a power equal to 365/7, and
subtracting 1 from the result.

Although published yield information is useful to investors in reviewing a
class' performance, investors should be aware that each Fund's yield fluctuates
from day to day and that the class' yield for any given period is not an
indication or representation by the Fund of future yields or rates of return on
the Fund's shares. Also, financial institutions through which investors may
purchase and redeem Fund shares may charge their customers direct fees in
connection with an investment in a Fund, which will have the effect of reducing
the class' net yield to those shareholders. The yields of a class are not fixed
or guaranteed, and an investment in the Fund is not insured or guaranteed.
Accordingly, yield information may not necessarily be used to compare shares of
the Fund with investment alternatives which, like money market instruments or
bank accounts, may provide a fixed rate of interest. Also, it may not be
appropriate directly to compare a Fund's yield information to similar
information of investment alternatives which are insured or guaranteed.

Income calculated for the purpose of determining a class' yield differs from
income as determined for other accounting purposes. Because of the different
accounting methods used, and because of the compounding assumed in yield
calculations, the yield quoted for a class may differ from the rate of
distribution the class paid over the same period or the rate of income reported
in the Fund's financial statements.

OTHER PERFORMANCE AND SALES LITERATURE MATTERS

Total returns quoted in sales literature reflect all aspects of a Fund's return,
including the effect of reinvesting dividends and capital gain distributions.
Average annual returns generally are calculated by determining the growth or
decline in value of a hypothetical historical investment in a Fund over a stated
period, and then calculating the annually compounded percentage rate that would
have produced the same result if the rate of growth or decline in value had been
constant over the period. While average annual returns are a convenient means of
comparing investment alternatives, investors should realize that the performance
is not constant over time but changes from year to year, and that average annual
returns represent averaged figures as opposed to the actual year-to-year
performance of the Funds.

Average annual total return is calculated by finding the average annual
compounded rates of return of a hypothetical investment over such periods
according to the following formula:

P(1+T)n = ERV

Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value: ERV is the value, at the end
of the applicable period, of a hypothetical $1000 payment made
at the beginning of the applicable period.

OTHER ADVERTISING MATTERS

The Funds may advertise other forms of performance. For example, average annual
and cumulative total returns may be quoted as a percentage or as a dollar
amount, and may be calculated for a single investment, a series of investments,
and/or a series of redemptions over any time period. Total returns may be broken
down into their components of income and capital (including capital gains and
changes in share price) in order to illustrate the

15
<PAGE>

relationship of these factors and their contributions to total return. Any
performance information may be presented numerically or in a table, graph or
similar illustration.

A Fund may also include various information in its advertisements. Information
included in the Fund's advertisements may include, but is not limited to: (i)
the Fund's (or the Fund's corresponding Portfolio's) portfolio holdings and
portfolio allocation as of certain dates, such as portfolio diversification by
instrument type, by instrument or by maturity, (ii) descriptions of the
portfolio managers of the Fund or the Fund's corresponding Portfolio and the
portfolio management staff of FIA or summaries of the views of the portfolio
managers with respect to the financial markets, (iii) the results of a
hypothetical investment in a Fund over a given number of years, including the
amount that the investment would be at the end of the period, (iv) the effects
of earning Federally and, if applicable, state tax-exempt income from the Fund
or investing in a tax-deferred account, such as an individual retirement account
and (v) the net asset value, net assets or number of shareholders of a Fund as
of one or more dates.

In connection with its advertisements a Fund may provide "shareholders' letters"
which serve to provide shareholders or investors an introduction into the
Fund's, the Portfolio's, the Trust's, the Core Trust's or any of the Trust's or
the Core Trust's service providers' policies or business practices.

Appendix D contains further information on matters that may be advertised.

6. MANAGEMENT

TRUSTEES AND OFFICERS OF THE TRUST

The trustees and officers of the Trust and their principal occupations during
the past five years are set forth below. Each Trustee who is an "interested
person" (as defined by the 1940 Act) of the Trust is indicated by an asterisk.

John Y. Keffer,* Chairman and President (age 55)

President, Forum Financial Group, LLC (mutual fund services company
holding company). Mr. Keffer is also a director and/or officer of
various registered investment companies for which the various Forum
Financial Group of Companies provides services. His address is Two
Portland Square, Portland, Maine 04101.

Costas Azariadis, Trustee (age 55)

Professor of Economics, University of California, Los Angeles, since
July 1992. His address is Department of Economics, University of
California, Los Angeles, 405 Hilgard Avenue, Los Angeles, California
90024.

James C. Cheng, Trustee (age 56)

President of Technology Marketing Associates (a marketing consulting
company) since September 1991. His address is 27 Temple Street,
Belmont, Massachusetts 02178.

J. Michael Parish, Trustee (age 54)

Partner at the law firm of Reid and Priest, LLP, since 1995. Prior
thereto, he was a partner at Winthrop Stimson Putnam & Roberts from
1989-1995. His address is 40 West 57th Street, New York, New York
10019.

16
<PAGE>

Mark D. Kaplan, Vice President (age 42)

Director, Investments, Forum Financial Group, LLC with which he has
been associated since September 1995. Prior thereto, Mr. Kaplan was
Managing Director and Director of Research at H.M. Payson & Co. His
address is Two Portland Square, Portland, Maine 04101.

Stacey Hong, Treasurer (age 32)

Director, Fund Accounting, Forum Financial Group, LLC, with which he
has been associated since April 1992. Mr. Hong also serves as an
officer of various registered investment companies for which the
various Forum Financial Group of Companies provides services. His
address is Two Portland Square, Portland, Maine 04101.

Leslie K. Klenk, Secretary (age 34)

Assistant Counsel, Forum Financial Group, LLC, with which she has been
associated since April 1998. Prior thereto, Ms. Klenk was Vice
President and Associate General Counsel at Smith Barney Inc. Ms. Klenk
is also an officer of other investment companies for which the Forum
Financial Group of Companies provides services. Her address is Two
Portland Square, Portland, Maine 04101.

Pamela Stutch, Assistant Secretary (age 31)

Fund Administrator, Forum Financial Group, LLC, with which she has
been associated since May 1998. Prior thereto, Ms. Stutch attended
Temple University School of Law and graduated in 1997. Ms. Stutch was
as a legal intern for the Maine Department of the Attorney General.
Ms. Stutch is also an officer of other investment companies for which
the Forum Financial Group of Companies provides services. Her address
is Two Portland Square, Portland, Maine 04101.

TRUSTEES AND OFFICERS OF CORE TRUST

The Trustees and officers of Core Trust and their principal occupations during
the past five years are set forth below. Each of the Trustees of the Trust is
also a Trustee of Core Trust and several officers of the Trust serve as officers
of Core Trust . Each Trustee who is an "interested person" (as defined by the
1940 Act) of Core Trust is indicated by an asterisk. Accordingly, for background
information pertaining to the Trustees and these officers, see "Trustees and
Officers of the Trust" above.

John Y. Keffer,* Chairman and President.

Costas Azariadis, Trustee.

James C. Cheng, Trustee.

J. Michael Parish, Trustee.

Thomas G. Sheehan, Vice President (age 44)

Managing Director, , Forum Financial Group, LLC, with which he has been
associated since October, 1993. Mr. Sheehan also serves as an officer
of other registered investment companies for which the Forum Financial
Group of Companies provides services. His address is Two Portland
Square, Portland, Maine 04101.

Stacey Hong, Treasurer

17
<PAGE>

David I. Goldstein, Vice President and Secretary (age 37)

General Counsel, Forum Financial Group, LLC, with which he has been
associated since 1991. Mr. Goldstein also serves as an officer of other
registered investment companies for which the Forum Financial Group of
Companies provides services. His address is Two Portland Square,
Portland, Maine 04101.

Pamela J. Wheaton, Assistant Treasurer (age 38)

Senior Manager, Fund Accounting, Forum Financial Group, LLC, with which
she has been associated since 1989. Ms. Wheaton is also an officer of
other registered investment companies for which the Forum Financial
Group of Companies provides services. Her address is Two Portland
Square, Portland, Maine 04101.

Leslie K. Klenk, Assistant Secretary.

Pam Stutch, Assistant Secretary

TRUSTEE COMPENSATION

THE TRUST. Each Trustee of the Trust (other than John Y. Keffer, who is an
interested person of the Trust) is paid $1,000 for each Board meeting attended
(whether in person or by electronic communication) and $1,000 for each committee
meeting attended on a date when a Board meeting is not held. In addition to the
$1,000 for each Board meeting attended, each Trustee is paid $100 per active
portfolio of the Trust. To the extent a meeting relates to only certain
portfolios of the Trust, Trustees are paid the $100 fee only with respect to
those portfolios. Trustees are also reimbursed for travel and related expenses
incurred in attending meetings of the Board. No officer of the Trust is
compensated by the Trust.

The following table provides the aggregate compensation paid to each Trustee.
The Trust has not adopted any form of retirement plan covering Trustees or
officers. Information is presented for the fiscal year ended August 31, 1998.
<TABLE>
<S> <C> <C> <C> <C>
Accrued Annual
Aggregate Pension Benefits Upon Total
Trustee Compensation Benefits Retirement Compensation
------- ------------ -------- ---------- ------------
Mr. Keffer None None None None
Mr. Azariadis $2,759 None None $2,759
Mr. Cheng $2,759 None None $2,759
Mr. Parish $2,759 None None $2,759
</TABLE>

CORE TRUST. Each of the Trustees of the Trust is also a Trustee of Core Trust.
Each Trustee of Core Trust is paid $1,000 for each meeting of the Core Trust
Board attended (whether in person or by electronic communication) plus $100 for
each active portfolio of Core Trust and is paid $1000 for each committee meeting
attended on a date when the Core Trust Board meeting is not held. As of August
31, 1998, there were twenty-one active portfolios of Core Trust (including
certain of the Portfolios). Trustees are also reimbursed for travel and related
expenses incurred in attending meetings of the Core Trust Board. No officer of
Core Trust is compensated or reimbursed for expenses by Core Trust. Since
commencement of the Trust's operations, Mr. Keffer has not accepted any fees for
his services as Trustee.

The following table provides the aggregate compensation paid to each trustee of
Core Trust for the fiscal year ended August 31, 1998. Core Trust has not adopted
any form of retirement plan covering trustees or officers of Core Trust.

18
<PAGE>

<TABLE>
<S> <C> <C> <C> <C>
Accrued Annual
Aggregate Pension Benefits Upon Total
Trustee Compensation Benefits Retirement Compensation
------- ------------ -------- ---------- ------------
Mr. Keffer None None None None
Mr. Azariadis $1,944 None None $1,944
Mr. Parish $1,944 None None $1,944
Mr. Cheng $1,944 None None $1,944
</TABLE>

Each Trustee of Core Trust (other than John Y. Keffer, who is an interested
person of Core Trust) is paid $1,000 for each Core Trust Board meeting attended
(whether in person or by electronic communication) plus $100 per active
portfolio of Core Trust and is paid $1,000 for each committee meeting attended
on a date when a Core Trust Board meeting is not held. To the extent a meeting
relates to only certain portfolios of Core Trust, trustees are paid the $100 fee
only with respect to those portfolios. Core Trust trustees are also reimbursed
for travel and related expenses incurred in attending meetings of the Core Trust
Board.

INVESTMENT ADVISER

FIA furnishes to the Portfolios at its own expense all services, facilities and
personnel necessary in connection with managing the Portfolios' investments and
effecting portfolio transactions for the Portfolios, pursuant to an investment
advisory agreement between FIA and Core Trust (an "Advisory Agreement"). The
Advisory Agreement provides, with respect to each Portfolio, for an initial term
of one year from its effective date and for its continuance in effect for
successive twelve-month periods thereafter, provided the Advisory Agreement is
specifically approved at least annually by the Core Trust Board or by vote of
the interestholders of the Portfolios, and in either case by a majority of the
Trustees who are not parties to the Advisory Agreement or interested persons of
any such party.

Prior to January 2, 1998, Linden Asset Management, Inc. ("Linden") served as
investment adviser to Treasury Cash Portfolio, Government Cash Portfolio and
Cash Portfolio, and Forum Advisors, Inc. served as investment adviser to
Government Portfolio. Linden and Forum Advisors, Inc. also acted as investment
subadvisers to each Portfolio that they did not manage on a daily basis. On
January 2, 1998, Forum Advisors, Inc. acquired Linden and reorganized into a new
company named Forum Investment Advisors, LLC. These transactions did not result
in any change in advisory staff, portfolio managers, or advisory fees, or any
other material change.

Table 1 in Appendix C shows the dollar amount of fees paid under the investment
advisory agreements between Core Trust and Linden, between Core Trust and Forum
Advisors, Inc., and between Core Trust and FIA, as applicable, with respect to
each Portfolio. This information is provided for the past three years (or
shorter time a Portfolio has been operational).

The Advisory Agreement is terminable without penalty by Core Trust with respect
to the Portfolio on 60 days' written notice when authorized either by vote of
the Portfolio's interestholders or by a vote of a majority of the Core Trust
Board, or by FIA on not more than 60 days' nor less than 30 days' written
notice, and will automatically terminate in the event of its assignment. The
Advisory Agreement also provides that, with respect to a Portfolio, FIA shall
not be liable for any error of judgment or mistake of law or for any act or
omission in the performance of its duties to the Portfolio, except for willful
misfeasance, bad faith or gross negligence in the performance of FIA's duties or
by reason of reckless disregard of its obligations and duties under the Advisory
Agreement. The Advisory Agreement provides that FIA may render services to
others.

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Prior to January 15, 1996, Forum Advisors, Inc. acted as Daily Assets Government
Fund's investment adviser under an investment advisory agreement with Forum
Funds, Inc. Under that investment advisory agreement, Forum Advisors, Inc.
received a fee at an annual rate of 0.20% of the average daily net assets of the
Fund.

In addition to receiving an advisory fee from a Portfolio it advises, FIA may
also act and be compensated as investment manager for its clients with respect
to assets which are invested in the Portfolio. In some instances, FIA may elect
to credit against any investment management fee received from a client who is
also a shareholder in the Portfolio an amount equal to all or a portion of the
fees received by FIA or any affiliate of FIA from the Portfolio with respect to
the client's assets invested in the Portfolio.

The Trust has confirmed its obligation to pay all of its expenses, including:
interest charges, taxes, brokerage fees and commissions; certain insurance
premiums; fees, interest charges and expenses of the custodian, transfer agent
and dividend disbursing agent; telecommunications expenses; auditing, legal and
compliance expenses; costs of forming the trust and maintaining corporate
existence; costs of preparing and printing the Trust's prospectuses, statements
of additional information, account application forms and shareholder reports and
delivering them to existing and prospective shareholders; costs of maintaining
books of original entry for portfolio and fund accounting and other required
books and accounts and of calculating the net asset value of shares of the
Funds; costs of reproduction, stationery and supplies; compensation of Trustees,
officers and employees of the Trust and costs of other personnel performing
services for the Trust; costs of corporate meetings; SEC registration fees and
related expenses; state securities laws registration fees and related expenses;
and fees payable to an investment adviser under an investment advisory
agreement.

Anthony R. Fischer, Jr., is primarily responsible for the day-to-day management
of the Portfolios. Mr. Fischer was the sole stockholder, director and officer of
Linden from 1992 until its acquisition by FIA. He has been primarily responsible
for the day-to-day management of Treasury Cash Portfolio, Government Cash
Portfolio and Cash Portfolio since their inception. Mr. Fischer has over
twenty-five years experience in the money market industry. From 1984 through
1989, Mr. Fischer served as Senior Vice President and Treasurer of United
California Savings Bank, Santa Ana, California, and prior thereto, as a Manager
for five years at PaineWebber Jackson & Curtis, New York, New York.

ADMINISTRATION

Table 2 in Appendix C shows the dollar amount of fees paid for administrative
services by the Funds and the Portfolios. This information is provided for the
past three years (or shorter time a Fund or Portfolio has been operational).

THE TRUST. Pursuant to an administration agreement (the "Trust Administration
Agreement"), FAdS supervises the overall management of the Trust (which
includes, among other responsibilities, negotiation of contracts and fees with,
and monitoring of performance and billing of, the transfer agent and custodian
and arranging for maintenance of books and records of the Trust) and provides
the Trust with general office facilities. The Trust Administration Agreement
provides, with respect to the Funds, for an initial term of one year from its
effective date and for its continuance in effect for successive twelve month
period thereafter, provided the agreement is specifically approved at least
annually by the Board or by the shareholders of the Funds, and in either case by
a majority of the Trustees who are not parties to the Trust Administration
Agreement or interested persons of any such party.

The Trust Administration Agreement may be terminated by either party without
penalty on 60 days' written notice and may not be assigned by either party
except upon written consent by the other party. The Trust Administration
Agreement also provides that FAdS shall not be liable for any action or inaction
in the administration or management of the Trust, except for willful
misfeasance, bad faith or gross negligence in the performance of FAdS's duties
or by reason of reckless disregard of its obligations and duties under the Trust
Administration Agreement.

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FAdS provides persons satisfactory to the Board to serve as officers of the
Trust. Those officers, as well as certain other employees and Trustees of the
Trust, may be Trustees, officers or employees of (and persons providing services
to the Trust may include) FAdS, FFSI, their affiliates or affiliates of FIA.

CORE TRUST. Pursuant to an administration agreement with Core Trust (the "Core
Trust Administration Agreement"), FAdS supervises the overall management of Core
Trust (which includes, among other responsibilities, negotiation of contracts
and fees with, and monitoring of performance and billing of, the custodian and
arranging for maintenance of books and records of Core Trust) and provides Core
Trust with general office facilities. The Core Trust Administration Agreement
provides, with respect to the Portfolios, for an initial term of one year from
its effective date and for its continuance in effect for successive twelve-month
periods thereafter, provided the agreement is specifically approved at least
annually by the Core Trust Board or by the interestholders of the Portfolios,
and in either case by a majority of the Trustees who are not parties to the Core
Trust Administration Agreement or interested persons of any such party. Prior to
December 1, 1997, FFSI provided administration services to Core Trust.

The Core Trust Management Agreement terminates automatically if it is assigned
and may be terminated without penalty with respect to the Portfolio by vote of a
Portfolio's shareholders or by either party on 60 days' written notice. The Core
Trust Management Agreement also provides that FAdS shall not be liable for any
action or inaction in the administration or management of Core Trust, except for
willful misfeasance, bad faith or gross negligence in the performance of Forum's
duties or by reason of reckless disregard of its obligations and duties under
the Core Trust Management Agreement.

At the request of the Core Trust Board, FAdS provides persons satisfactory to
the Core Trust Board to serve as officers of Core Trust.

DISTRIBUTION

FFSI, incorporated under the laws of the State of Delaware on February 7, 1986,
will remain distributor of the Funds' shares until February 28, 1999 pursuant to
a Distribution Agreement with the Trust. Thereafter, FFS, a limited liability
company formed under the laws of the State of Delaware on June 8, 1998 will
serve as distributor of shares of the Funds pursuant to a Distribution Agreement
between FFS and the Trust (the "Distribution Agreement").

The Distribution Agreement between the Trust and FFS provides, with respect to
each Fund, for an initial term of one year from its effective date and for its
continuance in effect for successive twelve-month periods thereafter, provided
the Distribution Agreement is specifically approved at least annually by the
Board or by the shareholders of the Fund, and in either case by a majority of
the Trustees who are not parties to the Distribution Agreement or interested
persons of any such party.

The Distribution Agreement terminates automatically if it is assigned and may be
terminated without penalty with respect to each Fund by vote of the Fund's
shareholders or by either party on 60 days' written notice. The Distribution
Agreement also provides that FFS shall not be liable for any error of judgment
or mistake of law or for any act or omission in the performance of services to
the Trust, except for willful misfeasance, bad faith or gross negligence in the
performance of FFS's duties or by reason of reckless disregard of its
obligations and duties under the Distribution Agreement. Prior to January 1,
1999, Forum Financial Services, Inc. served as the Trust's distributor.

With respect to any class that has adopted a distribution plan, the Distribution
Agreement is also terminable upon similar notice by a majority of the Trustees
who (i) are not interested persons of the Trust and (ii) have no direct or
indirect financial interest in the operation of that distribution plan or in the
Distribution Agreement ("Qualified Trustees").

FFS acts as sole placement agent for interests in the Portfolios and receives no
compensation for those services from the portfolios (FFSI until February 28,
1999). Prior to January 1, 1999, FFSI served as the sole placement agent for
interests in the Portfolios.

INVESTOR CLASS DISTRIBUTION PLAN. In accordance with Rule 12b-1 under the 1940
Act, with respect to the Investor Class of each Fund, the Trust adopted a
distribution plan (the "Investor Class Plan") which provides for the payment to
FFS (to FFSI until February 28, 1999) of a Rule 12b-1 fee at the annual rate of
up to 0.50% of the average daily net assets of the Investor class of each

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Fund (except Daily Assets Government Fund) as compensation for Forum's services
as distributor. FFS receicves a fee as an annual rate of 0.15% of the avergae
daily net assets of Daily Assets Government Fund attributable to Investor Shares
as compensation for its services under the Plan.

The Investor Class Plan provides that all written agreements relating to that
plan must be approved by the Board, including a majority of the Qualified
Trustees. In addition, the Investor Class Plan (as well as the Distribution
Agreement) requires the Trust and Forum to prepare and submit to the Board, at
least quarterly, and the Board will review, written reports setting forth all
amounts expended under the Investor Class Plan and identifying the activities
for which those expenditures were made.

The Investor Class Plan provides that it will remain in effect for one year from
the date of its adoption and thereafter shall continue in effect provided it is
approved at least annually by the shareholders or by the Board, including a
majority of the Qualified Trustees. The Investor Class Plan further provides
that it may not be amended to increase materially the costs which may be borne
by the Trust for distribution pursuant to the Investor Class Plan without
shareholder approval and that other material amendments of the Investor Class
Plan must be approved by the Qualified Trustees. The Investor Class Plan may be
terminated at any time by the Board, by a majority of the Qualified Trustees, or
by a Fund's Investor class shareholders.

Table 3 in Appendix C shows the dollar amount of fees payable under the Investor
Class Plan with respect to each Fund. This information is provided for the past
three years (or shorter time a Fund has been operational).

TRANSFER AGENT

FSS acts as transfer agent of the Trust pursuant to a transfer agency and
services agreement with the Trust (the "Transfer Agency Agreement"). The
Transfer Agency Agreement provides, with respect to the Funds, for an initial
term of one year from its effective date and for its continuance in effect for
successive twelve-month periods thereafter, provided that the Transfer Agency
Agreement is specifically approved at least annually by the Board or by a vote
of the shareholders of each Fund, and in either case by a majority of the
Trustees who are not parties to the Transfer Agency Agreement or interested
persons of any such party at a meeting called for the purpose of voting on the
Transfer Agency Agreement.

The Transfer Agency Agreement may be terminated by either party without penalty
on 60 days' written notice and may not be assigned by either party except upon
written consent of the other party. The Transfer Agency Agreement also provides
that FSS shall not be responsible for, and the Trust shall on behalf of each
applicable Fund or Class thereof indemnify and hold FSS harmless from and
against, any and all losses, damages, costs, charges, reasonable counsel fees,
payments, expenses and liability arising out of or attributable to all actions
of FSS or its agents or subcontractors required to be taken pursuant to the
Transfer Agency Agreement, provided that such actions are taken in good faith
and without gross negligence or willful misconduct. Prior to May 19, 1998, Forum
Financial Corp. served as the Trust's transfer agent.

Among the responsibilities of FSS as transfer agent for the Trust are: (1)
answering customer inquiries regarding account status and history, the manner in
which purchases and redemptions of shares of each Fund may be effected and
certain other matters pertaining to each Fund; (2) assisting shareholders in
initiating and changing account designations and addresses; (3) providing
necessary personnel and facilities to establish and maintain shareholder
accounts and records, assisting in processing purchase and redemption
transactions and receiving wired funds; (4) transmitting and receiving funds in
connection with customer orders to purchase or redeem shares; (5) verifying
shareholder signatures in connection with changes in the registration of
shareholder accounts; (6) furnishing periodic statements and confirmations of
purchases and redemptions; (7) arranging for the transmission of proxy
statements, annual reports, prospectuses and other communications from the Trust
to its shareholders; (8) arranging for the receipt, tabulation and transmission
to the Trust of proxies executed by shareholders with respect to meetings of
shareholders of the Trust; and (9) providing such other related services as the
Trust or a shareholder may reasonably request.

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FSS or any sub-transfer agent or processing agent may also act and receive
compensation as custodian, investment manager, nominee, agent or fiduciary for
its customers or clients who are shareholders of a Fund with respect to assets
invested in that Fund. FSS or any sub-transfer agent or other processing agent
may elect to credit against the fees payable to it by its clients or customers
all or a portion of any fee received from the Trust or from the Transfer Agent
with respect to assets of those customers or clients invested in the Portfolio.
FSS, FAdS or sub-transfer agents or processing agents retained by the FSS may
offer and redeem Fund shares and, in the case of sub-transfer agents or
processing agents, may also be affiliated persons of FSS or FAdS.

For its services under the Transfer Agency Agreement, FSS receives an annual fee
from each Fund of (i) 0.05% of each Fund's average daily net assets attributable
to Institutional Shares, 0.10% of each Fund's average daily net assets
attributable to Institutional Service shares and 0.25% of each Fund's average
daily net assets attributable to Investor Shares (computed and paid monthly in
arrears by the Fund), (ii) $12,000 per year (computed and paid monthly in
arrears by the Fund) and (iii) Annual Shareholder Account Fees of $18 per
shareholder account in Institutional Shares, Institutional Service Shares and
Investor Shares (computed as of the last business day of the prior month).

Table 4 in Appendix C shows the dollar amount of fees paid for transfer agency
services by the Funds. This information is provided for the past three years (or
shorter time a Fund has been operational).

SHAREHOLDER SERVICE PLAN AND AGREEMENTS

The Trust has adopted a shareholder service plan ("Shareholder Service Plan")
with respect to the Institutional Service class and the Investor class of each
Fund which provides that FAdS may obtain the services of financial institutions
to act as shareholder servicing agents for their customers invested in those
classes. The Shareholder Service Plan was effective on December 5, 1997 for the
Institutional Service class of those Funds then operating.

The Shareholder Service Plan provides that all written agreements relating to
that plan must be approved by the Board, including a majority of the Qualified
Trustees. In addition, the Shareholder Service Plan (as well as the various
shareholder service agreements) requires the Trust and FAdS to prepare and
submit to the Board, at least quarterly, and the Board will review written
reports setting forth all amounts expended under the plan and identifying the
activities for which those expenditures were made.

The Shareholder Service Plan provides that it will remain in effect for one year
from the date of its adoption and thereafter shall continue in effect provided
it is approved at least annually by the shareholders or by the Board. The
Shareholder Service Plan further provides material amendments of the plan must
be approved by the Qualified Trustees. The Shareholder Service Plan may be
terminated at any time by the Board or by a majority of the Qualified Trustees.

The Trust may enter into shareholder servicing agreements with various
Shareholder Servicing Agents pursuant to which those agents, as agent for their
customers, may agree among other things to: (i) answer shareholder inquiries
regarding the manner in which purchases, exchanges and redemptions of shares of
the Trust may be effected and other matters pertaining to the Trust's services;
(ii) provide necessary personnel and facilities to establish and maintain
shareholder accounts and records; (iii) assist shareholders in arranging for
processing purchase, exchange and redemption transactions; (iv) arrange for the
wiring of funds; (v) guarantee shareholder signatures in connection with
redemption orders and transfers and changes in shareholder-designated accounts;
(vi) integrate periodic statements with other shareholder transactions; and
(vii) provide such other related services as the shareholder may request.

In offering or redeeming Fund shares, some Shareholder Servicing Agents also may
impose certain conditions on their customers, subject to the terms of the
Trust's Prospectus, in addition to or different from those imposed by the Trust,
such as requiring a minimum initial investment or by charging their customers a
direct fee for their services. Some Shareholder Servicing Agents may also act
and receive compensation for acting as custodian, investment manager, nominee,
agent or fiduciary for its customers or clients who are shareholders of the
Funds with respect to assets invested in the Funds. These Shareholder Servicing
Agents may elect to credit against the fees payable to it

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<PAGE>

by its clients or customers all or a portion of any fee received from the Trust
with respect to assets of those customers or clients invested in the Funds.

Table 5 in Appendix C shows the dollar amount of fees paid under the Shareholder
Service Plan with respect to Institutional Service Shares and Investor Shares of
each Fund services by the Funds. This information is provided for the past three
years (or shorter time a Fund has been operational).

FUND ACCOUNTING

THE TRUST. Pursuant to a Fund Accounting Agreement, FAcS provides the Funds with
accounting services, including the calculation of the Fund's net asset value.
For these services, FAcS receives an annual fee of$36,000 per Fund. The Fund
Accounting Agreement shall continue in effect with respect to a Fund until
terminated; provided, that continuance is specifically approved at least
annually (i) by the Board or by a vote of a majority of the outstanding voting
securities of the Fund and (ii) by a vote of a majority of Trustees of the Trust
who are not parties to this Agreement or interested persons of any such party
(other than as Trustees of the Trust).

This Fund Accounting Agreement may be terminated with respect to a Fund at any
time, without the payment of any penalty (i) by the Board on 60 days' written
notice to FAcS or (ii) by FAcS on 60 days' written notice to the Trust. The Fund
Accounting Agreement may not be assigned by either party except with the written
authorization of the other party. Under the Fund Accounting Agreement, FAcS
shall not be liable for any action or inaction of Forum relating to any event
whatsoever in the absence of bad faith, willful misfeasance or gross negligence
in the performance of FAcS's duties or obligations under the Fund Accounting
Agreement or by reason of FAcS's reckless disregard of its duties and
obligations under the Fund Accounting Agreement.

CORE TRUST. Pursuant to a Portfolio and Unitholder Accounting Agreement with
Core Trust, FAcS also provides portfolio accounting services to each Portfolio,
including the calculation of each Portfolio's net asset value. For these
services, FAcS receives an annual fee of $48,000 per Portfolio plus surcharges
depending upon a Portfolio's asset level as well as the amount and type of the
Portfolio's portfolio transactions and positions. The annual fee for each of the
Treasury Cash Portfolio, Government Cash Portfolio and Cash Portfolio with up to
five unitholders (excluding FAcS and its affiliates) is the lesser of 0.05% of
the average daily net assets of the Portfolio or $48,000. This Portfolio and
Unitholder Accounting Agreement shall continue in effect with respect to a
Portfolio until terminated; provided, that continuance is specifically approved
at least annually by the Board. The Portfolio and Unitholder Accounting
Agreement may be terminated with respect to a Portfolio at any time, without the
payment of any penalty (i) by the Board on 60 days' written notice to FAcS or
(ii) by FAcS on 60 days' written notice to the Trust. FAcS is required to use
its best judgment and efforts in rendering fund accounting services and is not
liable to Core Trust for any action or inaction in the absence of bad faith,
willful misconduct or gross negligence.

Table 6 in Appendix C shows the dollar amount of fees paid for accounting
services by the Funds and the Portfolios. This information is provided for the
past three years (or shorter time a Fund or Portfolio has been operational).

FORUM FINANCIAL GROUP

FIA, FFS, FFSI, FSS and FAcS are members of the Forum Financial Group of
Companies. Each of these companies are affiliated through the common control by
John Y. Keffer.

7. DETERMINATION OF NET ASSET VALUE

The Funds do not determine net asset value on the following holidays: New Year's
Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Columbus Day, Veterans' Day, Thanksgiving and
Christmas. Purchases and redemptions are effected at the time of the next
determination of net asset value following the receipt of any purchase or
redemption order.

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Pursuant to the rules of the SEC, both the Board and the Core Trust Board have
established procedures to stabilize each Fund's and each Portfolio's, as
applicable, net asset value at $1.00 per share. These procedures include a
review of the extent of any deviation of net asset value per share as a result
of fluctuating interest rates, based on available market rates, from each Fund's
and Portfolio's, as applicable, $1.00 amortized cost price per share. Should
that deviation exceed 1/2 of 1%, the Board and the Core Trust Board,
respectively, will consider whether any action should be initiated to eliminate
or reduce material dilution or other unfair results to shareholders. Such action
may include redemption of shares in kind, selling portfolio securities prior to
maturity, reducing or withholding dividends and utilizing a net asset value per
share as determined by using available market quotations.

In determining the approximate market value of portfolio investments, the
Portfolios may employ outside organizations, which may use a matrix or formula
method that takes into consideration market indices, matrices, yield curves and
other specific adjustments. This may result in the securities being valued at a
price different from the price that would have been determined had the matrix or
formula method not been used. All cash, receivables and current payables are
carried at their face value.

Each investor in a Portfolio, including the Funds, may add to or reduce its
investment in that Portfolio on each Fund Business Day. As of the close of
regular trading on any Fund Business Day, the value of a Fund's beneficial
interest in a Portfolio is determined by multiplying the net asset value of the
Portfolio by the percentage, effective for that day, which represents the Fund's
share of the aggregate beneficial interests in the Portfolio. Any additions or
reductions, which are to be effected as of the close of the Fund Business Day,
are then effected. The Fund's percentage of the aggregate beneficial interests
in the Portfolio are then recomputed as the percentage equal to the fraction (i)
the numerator of which is the value of the Fund's investment in the Portfolio as
of the close of the Fund Business Day plus or minus, as the case may be, the
amount of net additions to or reductions from the Fund's investment in the
Portfolio effected as of that time, and (ii) the denominator of which is the
aggregate net asset value of the Portfolio as of the close of the Fund Business
Day plus or minus, as the case may be, the amount of net additions to or
reductions from the aggregate investments in the Portfolio by all investors in
the Portfolio. The percentage determined is then applied to determine the value
of the Fund's interest in the Portfolio as of the close of the next Fund
Business Day.

8. PORTFOLIO TRANSACTIONS

Purchases and sales of portfolio securities for the Portfolios usually are
principal transactions. Portfolio securities are normally purchased directly
from the issuer or from an underwriter or market maker for the securities. There
usually are no brokerage commissions paid for such purchases. Although Core
Trust does not anticipate that the Portfolios will pay any brokerage
commissions, in the event a Portfolio pays brokerage commissions or other
transaction-related compensation, the payments may be made to broker-dealers who
pay expenses of the Portfolio that it would otherwise be obligated to pay
itself. Any transaction for which a Portfolio pays transaction-related
compensation will be effected at the best price and execution available, taking
into account the amount of any payments made on behalf of the Portfolio by the
broker-dealer effecting the transaction. Purchases from underwriters of
portfolio securities include a commission or concession paid by the issuer to
the underwriter, and purchases from dealers serving as market makers include the
spread between the bid and asked prices.

Since each Fund's and Portfolio's inception, no brokerage fees were paid by any
Fund (during those periods of the Funds invested directly in securities), nor
any Portfolio.

Allocations of transactions to dealers and the frequency of transactions are
determined for each Portfolio by FIA in its best judgment and in a manner deemed
to be in the best interest of shareholders of that Portfolio rather than by any
formula. The primary consideration is prompt execution of orders in an effective
manner and at the most favorable price available to the Portfolio.

Investment decisions for the Portfolios will be made independently from those
for any other account or investment company that is or may in the future become
managed by FIA or its respective affiliates. If, however, a Portfolio and other
investment companies or accounts managed by FIA is contemporaneously engaged in
the purchase or sale of the same security, the transactions may be averaged as
to price and allocated equitably to each account. In some

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<PAGE>

cases, this policy might adversely affect the price paid or received by a
Portfolio or the size of the position obtainable for the Portfolio. In addition,
when purchases or sales of the same security for a Portfolio and for other
investment companies managed by FIA occur contemporaneously, the purchase or
sale orders may be aggregated in order to obtain any price advantages available
to large denomination purchases or sales.

No portfolio transactions are executed with FIA or any of its affiliates.

9. ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

Shares of the Funds are sold on a continuous basis by the distributor without
any sales charge.

In addition to the situations described in the Prospectus, the Trust may redeem
shares involuntarily to reimburse a Fund for any loss sustained by reason of the
failure of a shareholder to make full payment for shares purchased by the
shareholder or to collect any charge relating to transactions effected for the
benefit of a shareholder which is applicable to a Fund's shares as provided in
the Prospectus from time to time.

The Trust has filed a formal election with the SEC pursuant to which the Funds
will only effect a redemption in portfolio securities in kind if a shareholder
is redeeming more than $250,000 or 1% of the Fund's total net assets, whichever
is less, during any 90-day period.

The Funds may wire proceeds of redemptions to shareholders that have elected
wire redemption privileges only if the wired amount is greater than $5,000. In
addition, the Funds will only wire redemption proceeds to financial institutions
located in the United States.

By use of the telephone redemption or exchange privilege, the shareholder
authorizes FSS to act upon the instruction of any person representing himself to
either be, or to have the authority to act on behalf of, the investor and
believed by FSS to be genuine. The records of FSS of such instructions are
binding.

FSS will deem a shareholder's account "lost" if correspondence to the
shareholder's address of record is returned for six months, unless the Transfer
Agent determines the shareholder's new address. When an account is deemed lost
all distributions on the account will be reinvested in additional shares of the
Fund. In addition, the amount of any outstanding (unpaid for six months or more)
checks for distributions that have been returned to FSS will be reinvested and
the checks will be canceled.

EXCHANGE PRIVILEGE

The exchange privilege permits shareholders of the Funds to exchange their
shares for shares of any Participating Fund, which includes (i) the same class
of the other Funds and (ii) any other mutual fund for which Forum or its
affiliates act as investment adviser, manager or distributor and which
participates in the Trust's exchange privilege program. The following table
summarizes the current exchange opportunities associated with class of each
shares of the Funds.

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Class of Shares Exchange Opportunities
- --------------- ----------------------
Investor Shares Other Funds (Investor Shares)
Other series of the Trust
Sound Shore Fund, Inc.
The CRM Funds (Investor Shares)
The Cutler Trust
Memorial Funds (Trust Shares)

Institutional Shares Other Funds (Institutional Shares)

Institutional Service Shares Other Funds (Institutional Service Shares)
The CRM Funds (Institutional Shares)
Memorial Funds (Institutional Shares)

Exchange transactions are made on the basis of relative net asset values per
share at the time of the exchange transaction plus any applicable sales charge
of the Participating Fund whose shares are acquired. Exchanges are accomplished
by (i) a redemption of the shares of the Fund exchanged at the next
determination of that Fund's net asset value after the exchange order in proper
form (including any necessary supporting documents required by the Fund whose
shares are being exchanged) is accepted by the Transfer Agent and (ii) a
purchase of the shares of the fund acquired at the next determination of that
fund's net asset value after (or occurring simultaneously with) the time of
redemption.

Shares of any Participating Fund may be exchanged without a sales charge for
shares of any Participating Fund that are offered without a sales charge. If the
Participating Fund whose shares are purchased in the exchange transaction
imposes a higher sales charge the shareholder will be required to pay the sales
charge on the purchased shares. Shareholders are entitled to any reduced sales
charges of the Participating Fund into which they are exchanging to the extent
those reduced sales charges would be applicable to that shareholder's purchase
of shares.

The Funds do not charge for the exchange privilege and there is currently no
limit on the number of exchanges a shareholder may make, but each Fund reserves
the right to limit excessive exchanges by any shareholder. A pattern of frequent
exchanges may be deemed by the Transfer Agent to be contrary to the best
interests of the Fund's other shareholders and, at the discretion of the
Transfer Agent, may be limited by that Fund's refusal to accept additional
exchanges from the investor.

The terms of the exchange privilege are subject to change, and the privilege may
be terminated by any Participating Fund or the Trust. However the privilege will
not be terminated, and no material change that restricts the availability of the
privilege to shareholders will be implemented, without 60 days' advance notice
to shareholders. No notice need be given of an amendment whose only material
effect is to reduce the amount of sales charge required to be paid on the
exchange and no notice need be given if redemptions of shares of a Fund are
suspended or a Fund temporarily delays or ceases the sale of its shares.

INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT

The Funds (other than Daily Assets Municipal Fund) offer an individual
retirement plan (the "IRA") for individuals who wish to use shares of a Fund as
a medium for funding individual retirement savings. Under the IRA, distributions
of net investment income and capital gain will be automatically reinvested in
the IRA established for the investor. The Funds' custodian furnishes custodial
services to the IRAs for a service fee. Shareholders wishing to invest in a Fund
through an IRA should contact the Transfer Agent for further information.

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10. TAXATION

Qualification as a regulated investment company under the Internal Revenue Code
of 1986, as amended, does not involve governmental supervision of management or
investment practices or policies. The information set forth in the Prospectuses
and the following discussion relate solely to Federal income taxes on
distributions and other distributions by the Funds and assumes that the Funds
each qualify for treatment as a regulated investment company. Investors should
consult their own counsel for further details and for the application of
Federal, state and local tax laws to the investor's particular situation.

In order to continue to qualify for treatment as a regulated investment company
under the Internal Revenue Code, a Fund must distribute to its shareholders for
each taxable year at least 90% of its net investment income and must meet
several additional requirements. Among these requirements are the following: (1)
the Fund must derive at least 90% of its gross income each taxable year from
distributions, interest, payments with respect to securities loans, gains from
the sale or other disposition of securities and certain other income; (2)
subject to certain exceptions, at the close of each quarter of the Fund's
taxable year, at least 50% of the value of its total assets must be represented
by cash and cash items, securities of investment companies, U.S. Government
Securities and other securities, with these other securities limited, in respect
of any one issuer, to an amount that does not exceed 5% of the value of the
Fund's total assets; and (3) subject to certain exceptions, at the close of each
quarter of the Fund's taxable year, not more than 25% of the value of its total
assets may be invested in securities (other than securities of investment
companies and U.S. Government Securities) of any one issuer.

The Funds expect to derive substantially all of their gross income (exclusive of
capital gain) from sources other than dividends. Accordingly, it is expected
that none of the Funds' dividends or distributions will qualify for the
dividends-received deduction for corporations.

Distributions declared by a Fund in October, November, or December of any year
and payable to shareholders of record on a date in such a month will be deemed
to have been paid by the Fund and received by the shareholders on December 31 of
the year declared if paid by the Fund during the following January.

11. OTHER INFORMATION

CUSTODIAN

Pursuant to a Custodian Agreement with Core Trust, Imperial Trust Company, 201
North Figueroa Street, Suite 610, Los Angeles, California 90012, acts as the
custodian of each Portfolio's assets. The custodians' responsibilities include
safeguarding and controlling the Portfolios' cash and securities and determining
income payable on and collecting interest on Portfolio investments.

COUNSEL

Legal matters in connection with the issuance of beneficial interest of the
Trust are passed upon by Seward & Kissel, 1200 G Street, N.W., Washington, D.C.
20005.

AUDITORS

KPMG LLP, 99 High Street, Boston, Massachusetts 02110, independent auditors,
acts as auditors for the Funds and as auditors for the Portfolios.

28
<PAGE>

THE TRUST AND ITS SHARES

The Trust is a business trust organized under Delaware law. Delaware law
provides that shareholders shall be entitled to the same limitations of personal
liability extended to stockholders of private corporations for profit. The
securities regulators of some states, however, have indicated that they and the
courts in their state may decline to apply Delaware law on this point.

The Trust Instrument contains an express disclaimer of shareholder liability for
the debts, liabilities, obligations, and expenses of the Trust and requires that
a disclaimer be given in each contract entered into or executed by the Trust or
the Trustees. The Trust Instrument provides for indemnification out of each
series' property of any shareholder or former shareholder held personally liable
for the obligations of the series. The Trust Instrument also provides that each
series shall, upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the series and satisfy any judgment
thereon. Thus, the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which Delaware law does not
apply, no contractual limitation of liability was in effect and the portfolio is
unable to meet its obligations. FAdS believes that, in view of the above, there
is no risk of personal liability to shareholders.

The Trust Instrument further provides that the Trustees shall not be liable to
any person other than the Trust or its shareholders; moreover, the Trustees
shall not be liable for any conduct whatsoever, provided that a Trustee is not
protected against any liability to which he would otherwise by subject by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.

The Board is required to call a meeting of shareholders for the purpose of
voting upon the removal of any trustee when so requested in writing by the
shareholders of record holding at least 10% of the Trust's outstanding shares.

Each series' capital consists of shares of beneficial interest. Shares are fully
paid and nonassessable, except as set forth above with respect to Trustee and
shareholder liability. Shareholders representing 10% or more of the Trust or a
series may, as set forth in the Trust Instrument, call meetings of the Trust or
series for any purpose related to the Trust or series, as the case may be,
including, in the case of a meeting of the entire Trust, the purpose of voting
on removal of one or more Trustees. The Trust or any series may be terminated
upon the sale of its assets to, or merger with, another open-end management
investment company or series thereof, or upon liquidation and distribution of
its assets. Generally such terminations must be approved by the vote of the
holders of a majority of the outstanding shares of the Trust or the series;
however, the Trustees may, without prior shareholder approval, change the form
of organization of the Trust by merger, consolidation or incorporation. If not
so terminated or reorganized, the Trust and its series will continue
indefinitely. Under the Trust Instrument, the Trustees may, without shareholder
vote, cause the Trust to merge or consolidate into one or more trusts,
partnerships or corporations or cause the Trust to merge or consolidate into one
or more trusts, partnerships or corporations or cause the Trust to be
incorporated under Delaware law, so long as the surviving entity is an open-end
management investment company that will succeed to or assume the Trust's
registration statement.

SHAREHOLDINGS

As of December 1, 1998, the officers and trustees of the Trust as a group owned
less than 1% of the outstanding shares of each Fund.

Table 7 to Appendix C lists the persons who owned of record 5% or more of the
outstanding shares of a class of shares of the Fund.

29
<PAGE>

FUND STRUCTURE

CORE AND GATEWAY. Each Fund seek to achieve its objective by investing all of
its investable assets in a separate portfolio of a registered, open-end
management investment company with substantially the same investment objective
and policies as the Fund. This "Core and Gateway" fund structure is an
arrangement whereby one or more investment companies or other collective
investment vehicles that share investment objectives -- but offer their shares
through distinct distribution channels -- pool their assets by investing in a
single investment company having substantially the same investment objective and
policies (a "Core Portfolio"). This means that the only investment securities
that will be held by a Fund will be the Fund's interest in the Core Portfolio.
This structure permits other collective investment vehicles to invest
collectively in a Core Portfolio, allowing for greater economies of scale in
managing operations of the single Core Portfolio. The Board retains the right to
withdraw a Fund's investments from a Core Portfolio at any time; the Fund would
then resume investing directly in individual securities of other issuers or
could re-invest all of its assets in another Core Portfolio.

FUND SHAREHOLDERS' VOTING RIGHTS. A Core Portfolio normally will not hold
meetings of its investors except as required under the 1940 Act. As an
interestholder in a Core Portfolio, a Fund is entitled to vote in proportion to
its relative interest in the Core Portfolio. On any issue, a Fund will vote its
interest in a Core Portfolio in proportion to the votes cast by its
shareholders. If there are other investors in a Core Portfolio, there can be no
assurance that any issue that receives a majority of the votes cast by the
Fund's shareholders will receive a majority of votes cast by all Core Portfolio
shareholders. Generally, a Fund will hold a meeting of its shareholders to
obtain instructions on how to vote its interest in a Core Portfolio when the
Core Portfolio is conducting a meeting of its interestholders. However, subject
to applicable statutory and regulatory requirements, a Fund will not seek
instructions from its shareholders with respect to (i) any proposal relating to
a Core Portfolio that, if made with respect to the Fund, would not require the
vote of Fund shareholders, or (ii) any proposal relating to the Core Portfolio
that is identical to a proposal previously approved by the Fund's shareholders.

In addition to a vote to remove a trustee or change a fundamental policy,
examples of matters that will require approval of interestholders of a Core
Portfolio include, subject to applicable statutory and regulatory requirements:
the election of trustees; approval of an investment advisory contract; ; certain
amendments of the organizational documents for the Core Portfolio; ; or any
additional matters required or authorized by the charter or trust instrument and
by-laws of a Core Portfolio or any registration statement of a Core Portfolio,
or as the directors or trustees of the Core Portfolio may consider desirable.
The board of trustees of a Core Portfolio will typically reserve the power to
change nonfundamental policies without prior shareholder approval.

CONSIDERATIONS OF INVESTING IN A PORTFOLIO. A Fund's investment in a Core
Portfolio may be affected by the actions of other large investors in the Core
Portfolio, if any. For example, if the Core Portfolio had a large investor other
than the Fund that redeemed its interest in the Core Portfolio, the Core
Portfolio's remaining investors (including the Fund) might, as a result,
experience higher pro rata operating expenses, thereby producing lower returns.
A Fund may withdraw its entire investment from the Core Portfolio at any time,
if the Board determines that it is in the best interests of the Fund and its
shareholders to do so. A Fund might withdraw, for example, if other investors in
the Core Portfolio, by a vote of shareholders, changed the investment objective
or policies of the Core Portfolio in a manner not acceptable to the Board. A
withdrawal could result in a distribution in kind of portfolio securities (as
opposed to a cash distribution) by the Core Portfolio. That distribution could
result in a less diversified portfolio of investments for the Fund and could
affect adversely the liquidity of the Fund's portfolio. If the Fund decided to
convert those securities to cash, it normally would incur transaction costs. If
a Fund withdrew its investment from the Core Portfolio, the Board would consider
what action might be taken, including the management of the Fund's assets in
accordance with its investment objective and policies by FIA or the investment
of all of the Fund's investable assets in another pooled investment entity
having substantially the same investment objective as the Fund.

30
<PAGE>

12. FINANCIAL STATEMENTS

AUGUST 31, 1998 ANNUAL REPORT

The Statements of Assets and Liabilities, Statements of Operations, Statements
of Changes in Net Assets, Financial Highlights and Notes Thereto of Daily Assets
Treasury Obligations, Daily Assets Government Obligations Fund, Daily Assets
Government Fund , Daily Assets Cash Fund, and Daily Assets Municipal Fund for
the fiscal year ended August 31, 1998 and the Independent Auditors' Report
thereon (included in the Annual Report to Shareholders), which are delivered
along with this SAI, are incorporated herein by reference. Also incorporated by
reference into this SAI are the Schedules of Investments, Statements of Assets
and Liabilities, Statements of Operations, Statements of Changes in Net Assets,
and notes thereto, of Treasury Cash Portfolio, Government Portfolio, Government
Cash Portfolio, Cash Portfolio and Municipal Cash Portfolio for the fiscal year
ended August 31, 1998 and the Independent Auditors' Report thereon.

31
<PAGE>

APPENDIX A - DESCRIPTION OF SECURITIES RATINGS

CORPORATE BONDS

MOODY'S INVESTORS SERVICE, INC. ("MOODY'S"). Bonds which are rated Aaa are
judged by Moody's to be of the best quality. They carry the smallest degree of
investment risk and are generally referred to as "gilt edge." Interest payments
are protected by a large or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to change, such changes
as can be visualized are most unlikely to impair the fundamentally strong
position of such issues.

Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.

Bonds which are rated A possess many favorable investment attributes and are to
be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment some time in the future.

Note: Those bonds in the Aa and A groups which Moody's believes possess the
strongest investment attributes are designated by the symbols Aa1 and A1.

STANDARD AND POOR'S, A DIVISION OF THE MCGRAW HILL COMPANIES ("S&P"). Bonds
rated AAA have the highest rating assigned by S&P. Capacity to pay interest and
repay principal is extremely strong.

Bonds rated AA have a very strong capacity to pay interest and repay principal
and differ from the highest rated issues only in small degree.

Bonds rated A have a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt rated in higher rated
categories.

Note: The ratings for AA and A may be modified by the addition of a plus (+) or
minus (-) sign to show the relative standing within the rating category.

FITCH IBCA, INC. ("FITCH"). AAA Bonds are considered to be investment grade and
of the highest credit quality. The obligor has an exceptionally strong ability
to pay interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.

AA Bonds are considered to be investment grade and of very high credit quality.
The obligor's ability to pay interest and repay principal is very strong,
although not quite as strong as bonds rated AAA. Because bonds rated in the AAA
and AA categories are not significantly vulnerable to foreseeable future
developments, shorter-term debt of these issuers is generally rate F-1+.

A Bonds are considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.

Plus (+) and minus (-) signs are used with a rating symbol to indicate the
relative position of a credit within the rating category. Plus and minus signs,
however, are not used in the AAA categories.

A-1
<PAGE>

COMMERCIAL PAPER

MOODY'S. Moody's two highest ratings for short-term debt, including commercial
paper, are Prime-1 and Prime-2. Both are judged investment grade, to indicate
the relative repayment ability of rated issuers.

Issuers rated Prime-1 have a superior ability for repayment of senior short-term
debt obligations. Prime-1 repayment ability will often be evidenced by many of
the following characteristics:

o Leading market positions in well-established industries.
o High rates of return on funds employed.
o Conservative capitalization structure with moderate reliance on debt
and ample asset protection.
o Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
o Well-established access to a range of financial markets and assured
sources of alternate liquidity.

Issuers rated Prime-2 by Moody's have a strong ability for repayment of senior
short-term debt obligations. This will normally be evidenced by many of the
characteristics of issuers rated Prime-1 but to a lesser degree. Earnings trends
and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.

S&P. S&P's two highest commercial paper ratings are A and B. Issues assigned an
A rating are regarded as having the greatest capacity for timely payment. Issues
in this category are delineated with the numbers 1, 2 and 3 to indicate the
relative degree of safety. An A-1 designation indicates that the degree of
safety regarding timely payment is either overwhelming or very strong. Those
issues determined to possess overwhelming safety characteristics are denoted
with a plus (+) sign designation. The capacity for timely payment on issues with
an A-2 designation is strong. However, the relative degree of safety is not as
high as for issues designated A-1. A-3 issues have a satisfactory capacity for
timely payment. They are, however, somewhat more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the higher
designations. Issues rated B are regarded as having only an adequate capacity
for timely payment. However, such capacity may be damaged by changing conditions
or short-term adversities.

FITCH. Fitch's short-term ratings apply to debt obligations that are payable on
demand or have original maturities of generally up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal and
investment notes.

F-1+. Issues assigned this rating are regarded as having the strongest degree of
assurance for timely payment.

F-1. Issues assigned this rating reflect an assurance of timely payment only
slightly less in degree than issues rated F-1+.

F-2. Issues assigned this rating have a satisfactory degree of assurance for
timely payment, but the margin of safety is not as great as for issues assigned
F-1+ or F-1 ratings.

A-2
<PAGE>

APPENDIX B - PERFORMANCE INFORMATION

For the seven-day period ended August 31, 1998, the annualized yields of each of
the classes of the Funds that were then operating were as follows:
<TABLE>
<S> <C> <C> <C> <C>
TAX EQUIVILENT TAX EQUIVILENT
CURRENT YIELD EFFECTIVE YIELD CURRENT YIELD EFFECTIVE YIELD
DAILY ASSETS TREASURY
OBLIGATIONS FUND
Investor Shares 4.92% 5.04% - -
Institutional Service Shares 5.19% 5.33% - -
Institutional Shares 5.44% 5.59% - -
DAILY ASSETS GOVERNMENT FUND
Investor Shares 6.17% 6.36% 10.21% 10.53%
Institutional Service Shares 4.99% 5.12% 8.26% 8.48%
Institutional Shares 5.24% 5.38% 8.68% 8.91%
DAILY ASSETS GOVERNMENT
OBLIGATIONS FUND
Investor Shares 4.82% 4.93% - -
Institutional Service Shares 5.11% 5.24% - -
Institutional Shares 5.36% 5.51% - -
DAILY ASSETS CASH FUND
Investor Shares 4.91% 5.03% - -
Institutional Service Shares 5.21% 5.34% - -
Institutional Shares 5.46% 5.60% - -
DAILY ASSETS MUNICIPAL FUND
Investor Shares 2.53% 2.57% 4.19% 4.26%
Institutional Service Shares 2.82% 2.86% 4.68% 4.74%
Institutional Shares 3.06% 3.11% 5.07% 5.15%
</TABLE>

B-1
<PAGE>

APPENDIX C- MISCELLANEOUS TABLES

TABLE 1 - INVESTMENT ADVISORY FEES ($)
<TABLE>
<S> <C> <C> <C>
GROSS FEE FEE WAIVED NET FEE PAID
TREASURY CASH PORTFOLIO
Year ended August 31, 1998 55,735 0 55,735
Year ended August 31, 1997 0
Year ended August 31, 1996 12,930 0 12,930
GOVERNMENT PORTFOLIO
Year ended August 31, 1998 23,813 0 23,813
Period ended August 31, 1997 9,064 0 9,064
Year ended March 31, 1997 20,637 0 20,637
Year ended March 31, 1996(1) 71,712 0 69,466
GOVERNMENT CASH PORTFOLIO
Year ended August 31, 1998 238,860 0 238,860
Year ended August 31, 1997 196,857 0 196,857
Year ended August 31, 1996 156,552 0 156,552
CASH PORTFOLIO
Year ended August 31, 1998 158,716 0 158,716
Year ended August 31, 1997 72,872 0 72,872
Year ended August 31, 1996 38,083 0 38,083
MUNICIPAL CASH PORTFOLIO
Year ended August 31, 1998 1,937 0 0
Year ended August 31, 1997 -- -- --
</TABLE>

(1) As of February 21, 1996, Daily Assets Government Fund invested all of its
assets in the Portfolio. For the period February 21, 1996 through March 31,
1996, the Portfolio incurred advisory expenses of $2,246. For the period
April 1, 1995 through February 20, 1996, Daily Assets Government Fund
invested directly in Portfolio securities and incurred advisory expenses of
$69,466.

C-1
<PAGE>

TABLE 2 - ADMINISTRATION FEES ($)
<TABLE>
<S> <C> <C> <C>
GROSS FEE FEE WAIVED NET FEE PAID
TREASURY CASH PORTFOLIO
Year ended August 31, 1998 74,964 29,678 45,286
Year ended August 31, 1997 24,287 14,346 9,941
Year ended August 31, 1996 19,198 9,307 9,891
GOVERNMENT PORTFOLIO
Year ended August 31, 1998 28,796 28,796 0
Period ended August 31, 1997 18,128 18,128 0
Year ended March 31, 1997 41,274 41,274 0
Year ended March 31, 1996 4,491 4,491 0
GOVERNMENT CASH PORTFOLIO
Year ended August 31, 1998 317,754 0 317,754
Year ended August 31, 1997 252,821 0 252,821
Year ended August 31, 1996 230,547 104,558 125,989
CASH PORTFOLIO
Year ended August 31, 1998 212,800 0 212,800
Year ended August 31, 1997 92,652 7,621 85,031
Year ended August 31, 1996 56,125 3,719 52,406
MUNICIPAL CASH PORTFOLIO
Year ended August 31, 1998 1,937 1,937 0
Year ended August 31, 1997 -- -- --
DAILY ASSETS TREASURY OBLIGATIONS FUND
Year ended August 31, 1998 24,549 24,549 0
Year ended August 31, 1997 -- -- --
DAILY ASSETS GOVERNMENT FUND
Year ended August 31, 1998 28,110 2,864 25,246
Period ended August 31, 1997 18,123 0 18,123
Year ended March 31, 1997 41,232 7,453 33,779
Year ended March 31, 1996 113,176 106,040 7,136
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Year ended August 31, 1998 4,115 4,115 0
Year ended August 31, 1997 -- -- --
DAILY ASSETS CASH FUND
Year ended August 31, 1998 10,505 10,505 0
Year ended August 31, 1997 7,453 7,453 0
DAILY ASSETS MUNICIPAL FUND
Year ended August 31, 1998 1,934 1,934 0
Year ended August 31, 1997 -- -- --
</TABLE>

C-2
<PAGE>

TABLE 3 - INVESTOR SHARES RULE 12B-1 FEES ($)
<TABLE>
<S> <C> <C> <C>
GROSS FEE FEE WAIVED NET FEE PAID
DAILY ASSETS TREASURY OBLIGATIONS FUND
Year ended August 31, 1998 0 0 0
DAILY ASSETS GOVERNMENT FUND
Period ended August 31, 1998 0 0 0
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Year ended August 31, 1998 0 0 0
DAILY ASSETS CASH FUND
Period ended August 31, 1998 0 0 0
DAILY ASSETS MUNICIPAL FUND
Year ended August 31, 1998 0 0 0
</TABLE>

C-3
<PAGE>

TABLE 4 - TRANSFER AGENCY FEES ($)
<TABLE>
<S> <C> <C> <C>
GROSS FEE FEE WAIVED NET FEE PAID
DAILY ASSETS TREASURY OBLIGATIONS FUND
Institutional Service Shares
Year ended August 31, 1998 6,071 6,069 2
Year ended August 31, 1997 -- -- --
Institutional Shares
Year ended August 31, 1998 31,381 31,036 345
Investor Shares
Year ended August 31, 1998 843 843 0
DAILY ASSETS GOVERNMENT FUND
Institutional Service Shares
Year ended August 31, 1998 68,534 53,276 15,258
Period ended August 31, 1997 50,810 44,054 6,756
Year ended March 31, 1997 116,051 101,485 14,566
Year ended March 31, 1996 110,792 96,881 13,911
Institutional Shares
Year ended August 31, 1998 4,874 4,853 21
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Institutional Service Shares
Year ended August 31, 1998 6,869 6,866 3
Year ended August 31, 1997 -- -- --
Institutional Shares
Year ended August 31, 1998 10,816 10,762 54
Investor Shares
Year ended August 31, 1998 843 843 0
DAILY ASSETS CASH FUND
Institutional Service Shares
Year ended August 31, 1998 27,955 15,294 12,661
Period ended August 31, 1997 29,772 17,766 12,006
Institutional Shares
Year ended August 31, 1998 9,362 9,311 51
Investor Shares
Year ended August 31, 1998 843 843 0
DAILY ASSETS MUNICIPAL FUND
Institutional Service Shares
Year ended August 31, 1998 842 842 0
Year ended August 31, 1997 -- -- --
Institutional Shares
Year ended August 31, 1998 4,150 4,126 24
Investor Shares
Year ended August 31, 1998 843 843 0
</TABLE>

C-4
<PAGE>

TABLE 5 - SHAREHOLDER SERVICE FEES ($)
<TABLE>
<S> <C> <C> <C>
GROSS FEE FEE WAIVED NET FEE PAID
DAILY ASSETS TREASURY OBLIGATIONS FUND
Institutional Service Shares
Year ended August 31, 1998 2,600 2,600 0
Investor Shares
Period ended August 31, 1998 0 0 0
DAILY ASSETS GOVERNMENT FUND
Institutional Service Shares
Period ended August 31, 1998 78,274 78,274 0
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Institutional Service Shares
Year ended August 31, 1998 2,018 2,018 0
Investor Shares
Period ended August 31, 1998 0 0 0
DAILY ASSETS CASH FUND
Institutional Service Shares
Year ended August 31, 1998 22,439 22,439 0
Investor Shares
Period ended August 31, 1998 0 0 0
DAILY ASSETS MUNICIPAL FUND
Institutional Service Shares
Year ended August 31, 1998 0 0 0
Investor Shares
Period ended August 31, 1998 0 0 0

</TABLE>
As of August 31, 1998, there was no effective Shareholder Plan with respect to
Institutional Shares of any Fund.

C-5
<PAGE>

TABLE 6 - FUND ACCOUNTING FEES ($)
<TABLE>
<S> <C> <C> <C>
GROSS FEE FEE WAIVED NET FEE PAID
TREASURY CASH PORTFOLIO
Year ended August 31, 1998 48,000 0 48,000
Year ended August 31, 1997 24,279 0 24,279
Year ended August 31, 1996 28,518 19,955 8,563
GOVERNMENT PORTFOLIO
Year ended August 31, 1998 48,000 37,946 10,054
Period ended August 31, 1997 20,000 0 20,000
Year ended March 31, 1997 48,000 0 48,000
Year ended March 31, 1996 5,241 0 5,241
GOVERNMENT CASH PORTFOLIO
Year ended August 31, 1998 48,000 0 48,000
Year ended August 31, 1997 48,000 0 48,000
Year ended August 31, 1996 42,000 0 42,000
CASH PORTFOLIO
Year ended August 31, 1998 48,000 0 48,000
Year ended August 31, 1997 48,000 0 48,000
Year ended August 31, 1996 42,000 14,957 27,043
MUNICIPAL CASH PORTFOLIO
Year ended August 31, 1998 8,800 8,800 0
Year ended August 31, 1997 -- -- --
DAILY ASSETS TREASURY OBLIGATIONS FUND
Year ended August 31, 1998 13,323 13,323 0
Year ended August 31, 1997 -- -- --
DAILY ASSETS GOVERNMENT FUND
Year ended August 31, 1998 14,000 4,000 10,000
Period ended August 31, 1997 5,000 0 5,000
Year ended March 31, 1997 12,000 0 12,000
Year ended March 31, 1996 38,621 0 38,621
DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Year ended August 31, 1998 14,064 14,064 0
Year ended August 31, 1997 -- -- --
DAILY ASSETS CASH FUND
Year ended August 31, 1998 18,999 12,999 6,000
Year ended August 31, 1997
DAILY ASSETS MUNICIPAL FUND
Year ended August 31, 1998 4,198 4,198 0
Year ended August 31, 1997 -- -- --
</TABLE>

C-6
<PAGE>

TABLE 7 - 5% SHAREHOLDERS

As of December 1, 1998, the officers and Trustees of the Trust as a group owned
less than 1% of the outstanding shares of each Fund. Also as of that date, the
following table lists the persons who owned of record 5% or more of the
outstanding shares of a class of shares, as well as their percentage holding of
all shares of the Fund
<TABLE>
<S> <C> <C>
PERCENTAGE OF SHARES PERCENTAGE OF SHARES
OF CLASS OWNED OF FUND OWNED
DAILY ASSETS TREASURY OBLIGATIONS FUND
Investor Shares
Forum Financial Group 99.00 0.01
Two Portland Square, Portland, ME 04101

Institutional Shares
Babb & Co., C/O Bank of New Hampshire 66.22 63.18
P.O. Box 477, Concord, NH 03302

Allagash & Co. 31.52 30.07
c/o Bank of New Hampshire
P.O. Box 477, Concord, NH 03302-0477

Institutional Service Shares
Allagash & Co., C/O Bank of New Hampshire 99.89 4.47%
P.O. Box 477, Concord, NH 03302

DAILY ASSETS GOVERNMENT FUND
Investor Shares
Donald A. Levi and Eileen Delasandro 20.07 0.20
FBO Quadra Capital Partners LP
401K Plan and Trust
270 Congress St., Boston, MA 02210

BankBoston IRA Cust. 15.66 0.16
FBO Nancy Hsiung
5 Ingraham Rd., Wellesley, MA 02181

Bank of Boston IRA R/O Cust 8.44 0.09
FBO Sean K. Gallagher
137 Garden Street
Garden City, NY 11530

Bank of Boston IRA Cust. 7.08 0.07
FBO Frederica Stevenson
P.O. Box 277, Southborough, MA 01772

BankBoston IRA Ro. Cust. 6.17% 0.06
FBO Deborah Delasandro
3 Lattice Place, Greenville, SC 29615

C-7
<PAGE>

Stephen John Williams 5.32% 0.05
1062 E. Princeton Ave.
Salt Lake City, UT 84105

Bank of Boston IRA Cust 5.18 0.05%
FBO Mary Jane Shara
3561 Wedgewood Drive
Lapeer, MI 48446

Institutional Shares
H.M. Payson & Co. Custody Account 53.58 44.08
P.O. Box 31, Portland, ME 04112

H.M. Payson & Co. Trust Account 46.19 37.93
P.O. Box 31, Portland, ME 04112

Institutional Service Shares
Bank of Boston FBO Merne E. Young 11.91 2.01
18751 San Rufino, Irvine, CA 92612

Casa Colina Centers for Rehabilitation 11.46 1.93
2850 N Garey Ave, PO Box 6001, Pomona, CA 91769

Lansdowne Parking Associates LP C/O Meredith Mgt. 8.27% 1.39
One Bridge Street #300, Newton, MA 02458

Retirement Planning Strategies 6.63 1.12
Scudder Growth and Income Fund, NY

DAILY ASSETS GOVERNMENT OBLIGATIONS FUND
Investor Shares
Forum Financial Group 99.00 .03
Two Portland Square, Portland, ME 04101

Institutional Shares
Allagash & Co., C/O Bank of New Hampshire 77.45 68.29
P.O. Box 477, Concord, NH 03302

Babb & Co., C/O Bank of New Hampshire 21.64 19.08
P.O. Box 477, Concord, NH 03302

Institutional Service Shares
Sound Shore Fund 26.39 3.12
C/O Forum Financial Services, Inc.
Two Portland Square, Portland, ME 04101

Cutler Equity Income Fund 25.87 3.05
C/O Forum Financial Services, Inc.
Two Portland Square, Portland, ME 04101

Cutler Approved List Equity Fund 25.66 3.03
C/O Forum Financial Services, Inc.
Two Portland Square, Portland, ME 04101

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<PAGE>

DAILY ASSETS CASH FUND
Investor Shares
Forum Financial Group 98.99 0.02
Two Portland Square, Portland, ME 04101

Institutional Shares
Allagash & Co., C/O Bank of New Hampshire 31.60 26.45
P.O. Box 477, Concord, NH 03302

H M Payson & Co Custody Acct 20.94 17.53
FBO Customer Funds Under Mgmt
P.O. Box 31, Portland, ME 04112

First Trust Co. (No Fee) 17.71 14.83
Nation City Bank Trust Dept.
227 Main Street, Evansville, IN 47708

First Trust Co. 13.80 11.55
Nation City Bank Trust Dept.
227 Main Street, Evansville, IN 47708

H M Payson & Co Trust Account 12.05 10.09
FBO Customer Funds Under Mgmt
P.O. Box 31, Portland, ME 04112

Institutional Service Shares
Cutler Equity Income Fund 17.71 2.88
C/O Forum Financial Services, Inc.
Two Portland Square, Portland, ME 04101

CRM Small Cap Value Fund 17.43 2.84
C/O Forum Financial Services, Inc
Two Portland Square, Portland, ME 04101

Cutler Approved List Equity Fund 17.41 2.83
C/O Forum Financial Services, Inc.
Two Portland Square, Portland, ME 04101

Sound Shore Fund 17.29 2.81
C/O Forum Financial Services, Inc
Two Portland Square, Portland, ME 04101

Allagash & Co. C/O Bank of New Hampshire 10.15 1.65
PO Box 477, Concord, NH 03302

CRM Large Cap Value 1.15
C/O Forum Financial Services, Inc.
Two Portland Square
Portland. ME 04101

DAILY ASSETS MUNICIPAL FUND
Investor Shares
Forum Financial Group 99.00 0.03
Two Portland Square, Portland, ME 04101

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<PAGE>

Institutional Shares
Babb & Co C/O Bank of New Hampshire 53.37 53.34
PO Box 477, Concord, NH 03302

Allagash & Co C/O Bank of New Hampshire 22.88 22.86
PO Box 477, Concord, NH 03302

National City Bank Trust Dept. 22.74 22.73
227 Main St., Evansville, IN 47708

Institutional Service Shares
Forum Financial Group 99.95 0.03
Two Portland Square, Portland, ME 04101
</TABLE>

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<PAGE>

APPENDIX D- ADDITIONAL ADVERTISING MATERIALS

TEXT OF PEOPLES HERITAGE NEWS RELEASE

Peoples Heritage Financial Group, Inc. (NASDAQ:PHBK) announced today that it has
formed an alliance with a major mutual fund provider and an investment advisory
firm to expand its mutual fund offerings. The alliance with Forum Financial
Group and H.M. Payson & Company will result in 18 funds, including the unique
Maine Municipal Bond Fund and New Hampshire Bond Fund, being offered through the
branches of Peoples' affiliate banks in Maine, New Hampshire and northern
Massachusetts and the Company's trust and investment subsidiaries

'There is no secret to where financial services are moving, under one roof,"
said William J. Ryan, Chairman, President and Chief Executive Officer of Peoples
Heritage. "One only has to watch the virtually daily announcements of
consolidations in the financial sector to understand that customers are
demanding and receiving 'one-stop' financial services.

"We think we are adding the additional competitive advantage of funds that are
managed and administered close to home."

Eighteen Forum funds will be offered including two Payson funds. The tax-free
Maine and New Hampshire state bond funds are the only two such funds available
and usually invest 80% of total assets in municipal securities. Other funds
being provided by the alliance include money market, fixed income and equity
funds.

Forum Financial, based in Portland, Maine since 1987, administers 124 funds with
more than $47.7 billion in assets. Forum manages mutual funds for independent
investment advisors such as Payson and for banks. Forum Investment Advisors, LLC
an affiliate, is the largest Maine-based investment advisor with approximately
$2.1 billion in fund assets under management.

"We are providing a great product set to the customers served by Peoples' nearly
200 branches in northern New England," said John Y. Keffer, Forum Financial
president, "The key today is to link a wide variety of investment options with
convergent, easy access for customers. I believe this alliance does just that."

H.M. Payson & Co., founded in 1854, is one of the nation's oldest investment
firms with nearly $1.05 billion in assets under management and $388 million in
non-managed custodial accounts. The Payson value Fund and Payson Balanced Fund
are among the 18 offerings.

"I believe we have all the ingredients of a tremendous alliance," said John
Walker, Payson president and managing director. "We have the region's premier
community banking company, a community-based investment advisor, and a local
mutual fund company that operates nationally and specializes in working with
banks. We are poised to provide solid investment performance and service."

Peoples Heritage Financial Group is a $10 billion multi-state bank and financial
services holding company headquartered in Portland, Maine. Its Maine banking
affiliate, Peoples Heritage Bank, has the state's leading deposit market share.
Its New Hampshire banking affiliate, Bank of New Hampshire, has the state's
leading deposit market share. Family Bank, the Company's Massachusetts banking
subsidiary, has the state's tenth largest deposit market share and the leading
market share in many of the northern Massachusetts communities it serves.
Peoples affiliate banks also operate subsidiaries in leasing, trust and
investment services and insurance.

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<PAGE>

FORUM FINANCIAL GROUP:

Headquarters: Two Portland Square, Portland, Maine 04101
President: John Y. Keffer
Offices: Portland, Seattle, Warsaw, Bermuda
*Established in 1986 to administer mutual funds for independent investment
advisors and banks *Among the nation's largest third-party fund administrators
*Uses proprietary in-house systems and custom programming capabilities
*Administration and Distribution Services: Regulatory, compliance,
expense accounting, budgeting for all funds
*Fund Accounting Services: Portfolio valuation, accounting, dividend
declaration, and tax advice
*Shareholder Services: Preparation of statements, distribution support,
inquiries and processing of trades
*Client Assets under Administration and Distribution: $60.4 billion
*Client Assets Processed by Fund Accounting: $47.7 billion
*Client Funds under Administration and Distribution: 124 mutual funds with 175
share classes
--------------------------------------------------
*International Ventures:
----------------------
Joint venture with Bank Handlowy in Warsaw, Poland, using Forum's
proprietary transfer agency and distribution systems Off-shore
investment fund administration, using Bermuda as Forum's center of
operations
*Forum Employees: United States -209, Poland - 76, Bermuda - 4
---------------

FORUM CONTACTS:
Mark Kaplan, Managing Director and Portfolio Manager, Forum Investment Advisors,
LLC,
(207) 879-1900 X 6123
Tony Santaniello, Director of Marketing, (207) 879-1900 X 6175

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<PAGE>

H.M. PAYSON & CO.:

Headquarters: One Portland Square, Portland, Maine
President and Managing Director: John Walker
Quality investment services and conservative wealth management since 1854
*Assets under Management: $1.2 Billion
*Non-Managed Custody Income Assets: $400 Million
*Client Base: 85% individuals; 15% institutional
*Owned by 13 shareholders; 12 managing directors
*Payson Balanced Fund and Payson Value Fund (administrative and shareholder
services provided by Forum Financial Group)
*Employees: 45

H.M. PAYSON & CO. CONTACT:
Joel Harris, Marketing Coordinator, (207) 772-3761

D-3
<PAGE>

TEXT OF FORUM BROCHURE

In connection with its advertisements, a Fund may provide a description of the
Fund's investment adviser and its affiliates, which are service providers to the
Fund. Text which is currently in use is set forth below.

"FORUM FINANCIAL GROUP OF COMPANIES

Forum Financial Group of Companies represent more than a decade of diversified
experience with every aspect of mutual funds. The Forum Family of Funds has
benefited from the informed, sharply focused perspective on mutual funds that
experience makes possible.

The Forum Family of Funds has been created and managed by affiliated companies
of Portland-based Forum Financial Group, among the nation's largest mutual fund
administrators providing clients with a full line of services for every type of
mutual fund.

The Forum Family of Funds is designed to give investment representatives and
investors a broad choice of carefully structured and diversified portfolios,
portfolios that can satisfy a wide variety of immediate as well as long-term
investment goals.

Forum Financial Group has developed its "brand name" family of mutual funds and
has made them available to the investment public and to institutions on both the
national and regional levels.

For more than a decade Forum has had direct experience with mutual funds from a
different perspective, a perspective made possible by Forum's position as a
leading designer and full-service administrator and manager of mutual funds of
all types.

Today Forum Financial Group administers and provides services for over 149
mutual funds for 12 different fund managers, with more than $47.7 billion in
client assets. Forum has its headquarters in Portland, Maine, and has offices in
Seattle, Bermuda, and Warsaw, Poland. In a joint venture with Bank Handlowy, the
largest and oldest commercial bank in Poland, Forum operates the only
independent transfer agent and mutual fund accounting business in Poland. Forum
directs an off-shore and hedge fund administration business through its Bermuda
office. It employs more than 275 professionals worldwide.

From the beginning, Forum developed a plan of action that was effective with
both start- up funds, and funds that needed restructuring and improved services
in order to live up to their potential. The success of its innovative approach
is evident in Forum's growth rate over the years, a growth rate that has
consistently outstripped that of the mutual fund industry as a whole, as well as
that of the fund service outsource industry.

Forum has worked with both domestic and international mutual fund sponsors,
designing unique mutual fund structures, positioning new funds within the
sponsors' own corporate planning and targeted markets.

Forum's staff of experienced lawyers, many of whom have been associated with the
Securities and Exchange Commission, have been available to work with fund
sponsors to customize fund components and to evaluate the potential of various
fund structures.

Forum has introduced fund sponsors to its unique proprietary Core and Gateway(R)
partnership, helping them to take advantage of this full-service master/feeder
structure.

Fund sponsors understand that even the most efficiently and creatively designed
fund can disappoint shareholders if it is inadequately serviced. That is the
reason why fund sponsors have relied on Forum to meet all of a fund's complex
compliance, regulatory, and filing needs.

D-4
<PAGE>

Forum's full service commitment includes providing state-of- the-art accounting
support (Forum has 4 CPAs on staff, as well as senior accountants who have been
associated with Big 6 accounting firms). Forum's proprietary accounting system
is continually upgraded and can provide custom-built modules to satisfy a fund's
specific requirements. This service is joined with transfer agency and
shareholder service groups that draw their strength both from the high caliber
of the people staffing each unit and from Forum's advanced technology support
system.

More than a decade of experience with mutual funds has given Forum practical
hands-on experience and knowledge of how mutual funds function "from the inside
out."

Forum has put that experience to work by creating the Forum Family of Funds, a
family where each member is designed and positioned for your best investment
advantage, and where each fund is serviced with the utmost attention to the
delivery of timely, accurate, and comprehensive shareholder information.

INVESTMENT ADVISERS

Forum Investment Advisors, LLC offers the services of portfolio managers with
the highest qualifications--because without such direction, a comprehensive and
goal-oriented investment program and ongoing investment strategy are not
possible. Serving as portfolio managers for the Forum Family of Funds are
individuals with decades of experience with some of the country's major
financial institutions.

Individual funds in the Forum Family of Funds invest in portfolios that have as
their investment adviser nationally recognized institutions, including Schroder
Capital Management International, Inc., a major figure in worldwide mutual funds
that, with its affiliates, managed over $175 billion as of June 30, 1998.

Forum Funds are also managed by the portfolio managers of H.M. Payson & Co.,
founded in Portland, Maine in 1854 and one of the oldest investment firms in the
country. Payson has approximately $1.05 billion in assets under management, with
clients that include pension plans, endowment funds, and institutional and
individual accounts.

FORUM INVESTMENT ADVISORS, LLC

Forum Investment Advisors, LLC is the largest Maine based investment adviser
with approximately $1.9 billion in assets under management. The portfolio
managers have decades of combined experience in a cross section of the country's
financial markets. The managers have specific, day-to-day experience in the
asset class portfolios they manage, bringing critical focus to meeting each
fund's explicit investment objectives. The portfolio managers have been involved
in investing the assets of large insurance companies, banks, pension plans,
individuals, and of course mutual funds. Forum Investment Advisors, LLC has a
staff of analysts and investment administrators to meet the demands of serving
shareholders in our funds.

FORUM FAMILY OF FUNDS

It has been said that mutual fund investment offerings--of which there are
nearly 10,000, with assets spread across stock, bond, and money market funds
worth more than $4 trillion--come in a rainbow of varieties. A better
description would be a "spectrum" of varieties, the spectrum graded from green
through amber and on to red. In simpler terms, from low risk investments,
through moderate to high risk. The lower the risk, the lower the possible reward
- -- the higher the risk, the higher the potential reward.

The Forum Family of Funds provides conservative investment opportunities that
reduce the risk of loss of capital, using underlying money market investments
U.S. Government securities (although the shares of the Forum Funds are neither
insured nor guaranteed by the U.S. Government or its agencies), thus cushioning
the investment against market volatility. These funds offer regular income,
ready access to your money, and flexibility to buy or sell at any time.

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<PAGE>

In the less conservative but still not aggressive category are funds in the
Forum Family that seek to provide steady income and, in certain cases, tax-free
earnings. Such investments provide important diversification to an investment
portfolio.

Growth funds in the Forum Family more aggressively pursue a high return at the
risk of market volatility. These funds include domestic and international stock
mutual funds."

D-6